China stopped importing Brazilian meat in September, when it identified two cases of mad cow in slaughterhouses in Minas Gerais and Mato Grosso.
Despite the World Organization for Animal Health stating that the cases were atypical, that they did not pose risks to the production chain, in October exports fell 43% compared to the same month in the previous year and the situation was repeated in November.
What this article covers:
What are the causes of the drop in national meat exports?
The high dollar, higher commodity prices, increased the price of animal feed using corn or soybeans as raw materials, also contributing to higher prices, in addition to the drought that hit the Center-South of the country and reduced grazing areas and forced cattle to be confined.
What measures of the Ministry of Agriculture helped to hold the high price of meat in the domestic market?
In October, the Ministry of Agriculture authorized storage for up to two months in containers — and not in cold rooms as required by health legislation — before the blockade on September 4. That is, the meat industry was able to keep the product in stock without having to make the surplus available for the domestic market, helping to keep prices high.
Another factor that can collaborate with excessive prices are butchers and supermarkets stocking up for the end of year festivities. Storing, however, involves the costly process of refrigeration.
Ox bull cycle: structural issues in the sector
Having fewer animals available for slaughter — due to the very life cycle of cattle, which need time for reproduction to be able to replace those that are slaughtered — is also a collaboration with the increase in meat prices.
The period to create a meat that will become a livestock product takes around 6 to 7 years. Cows go through a gestational period of 9 months — just like us humans — and the time it takes a calf to reach an adult ready for slaughter takes about two years.
In the current situation in which there are few animals available for slaughter and the price of the product is on the rise, the tendency is for ranchers to send the matrices (cows) for slaughter.
However, a smaller number of females implies a smaller amount of replacement animals (in this case, calves). Therefore, the next step in the cycle is to increase the price of beef from calves.
High price of meat and fall in Brazilian income
With a lower volume of exports, the number of slaughtered animals also falls, causing the price of live cattle to plummet in October. The arroba was quoted for R$ 255, when before it was an average of R$ 315.
The fact that Brazilians have not felt a decrease in the price of beef is due to the dynamics between inflation indicators, which include both the IPA (Producer Price Index) and the IPC (Consumer Price Index).
Live cattle on pasture, IPA items, have registered deflation since September and reached 5.29% in October. The biggest fall was registered in November, of 1.01%.