Rising beef prices squeeze carnivores from Buenos Aires to California

China’s appetite and higher feed prices see beef prices rise around the globe for consumers

Reuters – Beef prices are surging worldwide, taking meat off the menu in steak-loving Buenos Aires and spoiling summer barbecues in the United States as Chinese imports rise and the cost of feeding cattle soars.

Globally, the surge is contributing to the highest food prices since 2014, according to the United Nations food agency, hitting poorer consumers particularly hard as they struggle to recover from economic shutdowns triggered by the COVID-19 pandemic.

The rise in beef prices has been spurred by increasing demand from China, limited cattle supplies in some countries, a shortage of slaughterhouse workers and rising feed costs. The trend is starting to rattle supplier markets and impact policy.

Argentina, the second-biggest beef supplier to China after Brazil, on May 17 halted exports for a month as it grapples with runaway inflation. It blamed high demand from Asia for drawing down local beef supplies and raising domestic prices.

“The price of meat has climbed really high, it’s crazy,” said Fernanda Alvarenga, a 38-year-old administrative employee in Buenos Aires.

She said she has cut back to eating meat at home just one day a week, instead of every two days. She has also started preparing milanesa, a popular breaded meat dish, with a cheaper cuadrada cut of meat, instead of more expensive peceto cuts.

“It costs something like 4,000 to 5,000 pesos (US$42-US$53) every month to buy my meat. Before, for the same amount you could get a lot more.”

Beef prices in Argentina, where grilling beef on the barbecue is regarded as a basic human right and where the countryside is dotted with cattle ranches, have soared more than 60 per cent in a year. Per capita consumption has plunged, hitting a 100-year low in April, a meat industry chamber report showed.

Memes shared in WhatsApp chat groups lament how beef has become unaffordable, including jokes that inflation has pushed people instead to eat polenta — a wry dig at government food aid efforts during the pandemic.

China’s appetite

In the first four months of 2021, China imported 178,482 tonnes of beef from Argentina, up from 152,776 tonnes a year earlier, according to China’s General Administration of Customs data.

Most of the imports are older cows that are not consumed domestically, according to Argentina’s meat industry chamber, which opposes the government export ban. Farmers have protested the ban with a halt on local livestock trading.

China increased meat imports after African swine fever decimated its hog herd starting in 2018. More recently, Beijing suspended some beef imports from Australia, its No. 3 supplier from 2018 to 2020, as relations between the two countries deteriorate. Chinese importers have since depended more on other suppliers.

U.S. beef exports to China hit a monthly record in March of 14,552 tonnes, according to the U.S. Department of Agriculture, well above total shipments in all of 2019. A growing middle class in China is making room for beef in a diet that has long been pork based.

“Beef used to be mainly consumed outside the home, like at restaurants. But beef is increasingly popular for home cooking,” said Pan Chenjun, senior analyst at Rabobank.

Beef prices in China in late April were 4.4 per cent higher than a year earlier, while pork prices were down 27.9 per cent, according to data from China’s Ministry of Agriculture and Rural Affairs.

Shipping beef to importers like China is more profitable for countries such as Argentina and Brazil due to currency depreciation and weakening local demand, said Upali Galketi Aratchilage, the United Nations’ Food and Agriculture Organization senior economist. The result, though, is that higher exports can reduce domestic supplies, driving up prices, Aratchilage said.

The United States and Brazil are still struggling to replenish domestic inventories of frozen beef, chicken and pork in storage after shipments to China increased last year even as COVID-19 ripped through slaughterhouses, sickening workers and hobbling production.

‘Astronomical’ prices

In Clovis, California, retired army veteran Darin Cross said he has been shocked by two-pound (0.9-kg) packs of ground beef selling for US$10 at Walmart, up from US$8 previously. The 55-year-old is eating more vegetables as a result.

“For those of us on fixed incomes, that’s a pretty steep increase in a matter of just a couple of weeks,” Cross said. “My fear is that it’s just going to keep going.”

The average unit price for U.S. fresh beef in April rose by five per cent from March and was up about 10 per cent from a year earlier, according to NielsenIQ data. Pork and chicken prices are each up about 5.4 per cent from last year.

Outside New Orleans, Tina Howell, 45, said she stopped buying steaks in bulk to fill up a deep freezer at her home because grocers stopped offering sales. She has noticed New York strip steaks selling for about US$12 per pound, up from about US$7 previously.

“The prices are astronomical,” said Howell, who works in real-estate marketing.

Higher prices are benefiting meat packers like Tyson Foods, the largest U.S. meat processor by sales. The company said U.S. government stimulus cheques are driving exceptional demand by giving consumers more money to buy food.

Although U.S. cattle supplies are ample, beef production is limited by a labour shortage and the processing capacity in slaughterhouses, according to meat producers.

Meat packers are facing higher livestock feed costs with soy and corn prices around eight-year highs, and some are passing those costs on to consumers. Increased restaurant demand is also supporting prices as COVID-19 restrictions ease.

Nebraska-based Omaha Steaks, which sells premium beef, projects U.S. demand will remain strong through the summer as people are willing to have larger gatherings and pay for high-quality food, CEO Todd Simon said.

Brazilian meat packers JBS SA and BRF SA, however, have said they are struggling to pass on higher feed costs to consumers in their home market, though JBS has benefited from its U.S. operations.

About the author

Comments

explore

Stories from our other publications