Beef was the product which most affected food inflation in August, increasing on average by 25.6 percent last month, according to official government data.
Representatives from the sector are warning that even though the readjustment is not yet entirely noticeable at the till in butcher shops, prices have gone down by 20-30 percent after the post-devaluation rise. However, they also caution that there will be a shortage of supply felt between October and November, which means beef will surge in price again in those months.
“Consumers’ pockets couldn’t take the readjustment in August,'' Sergio Pedace, vice-president of the CAMYA Argentine Chamber of Butchers and Suppliers. said in an interview.
“The government has also pressured exporters and put cheaper meat up for sale locally to curb these increases until after the election."
Argentina's Economy Ministry has implemented different tools to try and tamper down the price of beef, among them giving back a 10-percent refund of purchases with debit cards of these products, effective until December 31. In addition, fixed prices for seven cuts are held until the 15th of every month and IVA value-added tax rebates for purchases, which started this week, also apply to beef.
However, according to the latest data from the INDEC national statistics bureau, the most popular cuts – such as (paleta, cuadril, nalga, carne picada etc.) saw increases of close to 40 percent last month. Depending on the region of the country, and according to several private studies such as a recent one by Fundación Mediterránea, meat products actually increased by up to 60 percent last month.
The diversity in prices is, Pedace explained, owing to the fact that after the devaluation shops with sufficient stock waited until prices went down so they did not have to hike so much. Yet “there were cases of butcher shops which paid dearly because they had no meat” and had to restock. The same is taking place now with price drops: despite experiencing a readjustment of 20-30 percent, lower values are not entirely reflected on supermarket aisles and shelves.
The readjustment in sales values is also contingent on demand.
“Consumers did not confirm that prices had gone up a few weeks ago, so sales were absolutely halted, which made prices go down at the Liniers livestock market” too, said Miguel Schiariti, president of the CICCRA Argentine Chamber of the Industry and Trade of Meat and Related Products.
The CICCRA chief stated that prices should be maintained for a while, but that could change depending on the climate.
“If it rains, animals won’t be in the pen anymore, they’ll be in the field, and when that happens the supply will decrease.” In this context, he said, “price increase forecasts for October are still effective."
For the time being, Schiariti added, price hikes had been curbed “due to the drought, which continues to force producers to send animals from the feedlot to the market.”
The consequences will also be felt next year, he added: “We estimate having between a million and 1.3 million less calves and we don’t know how many cows died as a result of this situation."
In addition to the climate Schiariti said the situation forcing producers to price less than they should “is runaway money- printing, which causes such inflation and prevents people from buying the products.”
In the same vein, Pedace specified that the change in prices will also be subject to export levels: “It all depends on what exporters do. The ceiling will be up to exporters, the floor to consumption."
As for international trade, pork producers are worried about the release of import permits announced for PyMEs (small and medium-sized companies).
“Many importers are PyMEs, so there is a possibility that because of the price differences with countries such as Brazil, where pork prices are a steal, the market will become saturated to the detriment of producers,” said Juan Ucelli, a consultant in the sector.
“There were moments in the late 1990s when 60 percent of what we consumed came from Brazil and 6,000 [domestic] producers were destroyed. It’s the worst scenario,” he warned.
“Pork has a price difference of between 40 and 50 percent with beef, which makes it very competitive,” Ucelli added.
“But people can’t even afford that."