The price of meat could rise between 15 and 20% until February next year. The prediction – and the warning – is from the Portuguese Association of the Meat Industry (APIC), which adds that the instability of the market and especially the grain price is leading to a decrease in the number of animals for consumption. “The coming weeks will be crucial for us to understand what the market’s reaction will be to the lack of animals and the fact that they are very light,” the association’s director, Graça Mariano, told DN/Dinheiro Vivo .
The reasons influencing this price increase are well known – rise in the price of raw materials, additives, packaging materials, transportation and electricity and gas, prompting producers to reduce livestock production because it is unprofitable – but now the dollar appreciation is added, causing China to buy meat in Europe again, explains Graça Mariano.
In the same vein, and now that tourism has slowed and the cost of living has risen significantly, APIC expects that “there will be a sharp decline in consumption, about 10% to 15%, reflecting the enormous difficulties facing the sector has will cross in the near term”. Currently, the decrease in the shopping cart is already visible, with consumers choosing to buy cheaper products. “There is a 1% decline in the consumption of meat products,” says Graça Mariano, citing data from Nielsen (consumption data analysis company) collected through August.
Without specifying in value terms the impact the crisis will have on the sector, APIC’s executive director guarantees that “in terms of profitability, we can say with certainty that companies are currently sitting with margins remaining”.
Bankruptcy risk
This leads to the risk of companies going bankrupt, warns João Bastos, the secretary general of the Portuguese Federation of Pig Farmers’ Associations (FPAS).
In the area of pig farming alone, it is estimated that by the end of this year the loss will amount to around 100 million euros. Although the federation is not registering a drop in consumption for the time being (according to data from the National Statistical Institute, about 262 tons of pork was consumed in the first seven months of this year, compared to 253 in the same period in 2021), the secretary general of FPAS emphasizes that the decline in demand is global and widespread.
As for price increases, João Bastos says that right now the prediction is that pork has reached its maximum annual value. And while supply and demand for this food are in equilibrium, the fluctuation of production costs, such as animal feed and energy services, remains unknown. “Manufacturing and industry have supported much of the rise in production costs, with prohibitive increases in goods such as gas, which increased by 500%, or animal feed, which increased by 80%, were not passed on to consumers,” he stresses. and recalls that, in the case of pig farming, “40% of raw materials used for animal feed in Portugal come from Ukraine”.
João Bastos recalled the use of the crisis reserve, which resulted in direct aid from the Ministry of Agriculture to pig farmers for a total amount of 5.5 million euros. “An important measure, but, as can easily be seen in light of the mounting losses in the sector, clearly insufficient to save thousands of companies, most of them family members, who are at risk of bankruptcy,” he warns.
A warning that also gives the Association of Cattle Breeders of the Alentejo Breed (ACBRA). “Production does not reflect the increase in the production factors in the meat sales prices, which reduces the profitability of farms,” said Luís Miguel Bagulho, the president of the association. And while the ACBRA has not seen a significant decrease in Alentejo beef consumption to date, Luís Bagulho does not note: “With the expected increase in energy, grains and fertilizers, it is possible that this situation could change, driving meat prices for consumers. continue to rise”. This could lead consumers to change their eating habits and replace beef “with cheaper”.
Although she takes the opposite view, Marianela Lourenço of the National Federation of Meat Traders (FNACC) agrees with the impact of the crisis on the sector. “We will gradually feel a market failure as production is reduced,” he warns, estimating the sector will have losses in the order of 20% due to inflation and feed, energy and fuel prices.
The executive director of APIC reinforces the statement of the representative of the FNACC. “Production costs cannot be reflected in the cost of the final product, given the market crisis and the need for large supermarkets to become increasingly competitive and put enormous pressure on meat suppliers,” said Graça Mariano, who also warns of the possibility of smaller companies go bankrupt. “The search for cheaper products and therefore of lower quality leads to the devaluation of the food chain and of the primary and secondary sectors,” he believes.
Source: DN
