Second-rate beef price drops 26% in supermarkets in Rio, but value should rise again | Economy

Survey was carried out with the 20 largest supermarket chains in Rio reproduction

Posted 24/11/2021 17:23 | Updated 11/24/2021 6:16 PM

A survey carried out by the Association of Supermarkets of Rio de Janeiro (Asserj) with the 20 largest supermarket chains in Rio revealed that the price charged by the industry in selling second-rate meat to markets fell by an average of 26%, compared to the last month. According to data, referring to the first 20 days of November, the price reduced due to the embargo imposed by China on imports by Brazilian meatpackers.

According to Asserj, meat, as a product with a short shelf life, has greater turnover in the market, which ends up generating impacts more quickly on the consumer when there are movements in the market.

According to Embrapa, last year Brazil won the position of largest meat exporter in the world, with 2.2 million tonnes and 14.4% of the international market, ahead of countries like Australia, the United States and India.

The good performance in exports ends up, invariably, reducing the offer on the domestic market. With the impossibility of selling to China, one of the biggest buyers of Brazilian beef, the increase in domestic availability directly impacted the price charged by the markets.

“With the suspension of imports by China, the supply of second-rate meat increased in Brazil. This caused prices to fall by an average of 26%. At a time of inflation, this is encouraging news for the consumer’s pocket”, said Fábio Queiroz, president of Asserj.

The rise in prices seen in recent months, however, still directly affects consumers’ budgets. The big issue behind the high levels of beef in the country can be explained by the changes in the sector during the pandemic, says economist and professor at Ibmec Tiago Sayão.

“Many slaughterhouses, during the pandemic, ended up adjusting their industrial plants to exclusively supply the international market. (…) When you think about the cattleman, he will evaluate how he will sell a kilo of meat [no mercado interno] comparing the income he receives in dollars. As you have a significant difference in the exchange rate, this ends up increasing prices in the domestic market”, explains the economist.

The big problem in relation to basing this market on the gain with the foreign currency is the difficulty in reducing prices in the other stages. In the case of livestock, the possibility of decreasing margins practiced by supermarkets is much lower than in industry, points out the specialist.

“Retailers will always work with very small margins, because the gain always ends up being in the previous stages. The relationship between the cattle raiser, the slaughterhouse and the industry has the greatest possibility of increasing margins. As it is a commodity, it will always assess the possibility of increasing this margin by selling on the international market”, he says.

Despite the rapid fall, China released, on Tuesday, 23, the import of batches of beef that were certified before the embargo on September 4 – the day before the announcement of mad cow cases in Minas Gerais and in the Mato Grosso, which motivated the measure. In addition, according to data from the Center for Advanced Studies in Applied Economics (Cepea) of the University of São Paulo (USP), the arroba of fat cattle has risen again, which further compresses the possibility of lowering consumer prices. On the last 12th, for example, the arroba was quoted at R$301; on the other hand, the price of this Tuesday, 23, brings the value of R$ 316.90.

“At first, there were two isolated cases of mad cow, so it is likely that, after these cases are clarified, there may be a return to normality in relation to imports from China. It is not an effect that can be considered permanent”, explains Tiago .

For Marco Quintarelli, consultant and specialist in retail, with the possibility of increasing external interest and the rise in costs in the production chain, it is also not possible to say that the reduction in prices will continue.

“If domestic demand is lower, meatpackers will certainly have to improve these prices, but the next few days will be of uncertainty,” he says. “I believe that until Christmas they will remain at this level. Afterwards, it is unknown, as there is a lot that influences the market”.

*intern under the supervision of Marina Cardoso