Producing the meat the world needs has never been so expensive, as farmers around the world are struggling with record feed prices and rising electricity bills, Bloomberg reports.
Rising feed and energy costs following the war in Ukraine have exacerbated problems for farmers around the world who are already struggling with droughts that reduce grazing land or bird flu outbreaks in North America and Europe. forced the slaughter of millions of birds.
Hit in all directions, many farmers decide to sell their livestock or raise fewer animals, which means that meat production will be capped in the long run. The number of cows slaughtered in the United States has reached its highest level in history, which means fewer calves and smaller herds of cattle. As a result, the price of meat, which is already at a record high, will not be reduced too soon, which will affect household budgets.
According to US government forecasts, world production of chicken, pork and beef will advance just 1.4% in 2022, up from 5.4% last year.
“Most of the pressures we face are not new or unusual. The problem is the combination of individual pressures,” said Rabobank analyst Justin Sherrard.
The Russian invasion has slowed down Ukraine’s grain exports, limiting wheat deliveries to major pork producers such as Spain and China. Feed costs are a large part of the costs of raising animals, and even in countries that produce the fodder they need on their own, prices have reached record highs. For example, on the Chicago Stock Exchange, corn futures prices rose 31% this year, while on the Paris stock exchange, corn futures prices rose 55%.
The conflict in Ukraine “has amplified a whole range of issues that we are already facing,” said Rupert Claxton, director of consulting firm Gira. “That increased the stress level from seven to ten,” Rupert Claxton added.
According to official estimates, pork production in the European Union, the world’s largest exporter, will fall by 3% this year, the first drop since 2019. Rising prices do not cover costs, which could lead farmers to slaughter animals. earlier than usual.
Last year, German pig herds fell to their lowest level since 1996, and AMI analyst Tim Koch expects the decline to continue this year. Outbreaks of African swine fever have led to restrictions on German pork exports and falling prices. In addition, with rising feed and energy costs, Tim Koch estimates that pig farmers will need prices ranging from 2 to 2.40 euros per kilogram of meat to be profitable, up from a price between 1.60 and 1.70 euros per kilogram in normal periods. Currently prices are below 2 euros per kilogram.
“Almost everyone, from producers to slaughter facilities, is cautious, buying fewer pigs and trying not to invest too much money now,” says Tim Koch.
Unfavorable weather conditions create a new problem. In Canada, drought has affected pastures and crops over the past year, so farmers and ranchers have resorted to fodder stocks and cash reserves, says Reg Schellenberg, president of the Canadian Cattlemen’s Association. “There is little fodder that can be bought, and when you find it, it’s extremely expensive,” says Reg Schellenberg.
All these increases will be felt on supermarket shelves.
“Producers cannot bear all the costs. It is very likely that we will see consumers pay more, at least in the near future,” said Upali Galketi Aratchilage of the Food and Agriculture Organization of the United Nations (FAO).
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