That bacon, chicken and beef won’t be cheap anytime soon

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(Bloomberg) – The world’s meat production has rarely been so expensive.

In South Calgary, Don Lowe, who has been raising cattle for 40 years, hopes to expand his herd of 800 beef cattle this year, but as food prices skyrocket, he struggles to keep up with the animals around him. Across the seas of East Yorkshire, England, pig farmer Kate Moore says maintenance of his 32,000-strong flock is becoming extremely difficult.

“It’s terrible,” said Moore, who is now losing about £ 60 ($ 75) per animal due to the rising cost of feeding and caring for them. “There is no light at the end of the tunnel at the moment. The British pig industry will never be the same. “

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Farmers around the world – more than 40 billion pigs, cows, buffaloes, sheep, goats and poultry – are struggling with record prices for livestock feed due to a shortage of grain and soy. Electricity bills that keep their granaries well lit and warm have also increased for trucks that take their animals to graveyards. Rising crop and energy costs in the wake of Russia’s war in Ukraine have exacerbated their plight, even as they fight a bird-flu outbreak from drought to North America to Europe that has wiped out millions of poultry.

Injuries from all sides, many farmers are selling cattle or breeding less, it is seen that the output will be limited in the long run. The United States has the highest number of beef slaughterhouses since the record began in 1986, and cows that do not give birth to calves will result in smaller herds. This means that meat prices – already at record highs – will not fade quickly, but will weigh more heavily on the household budget which is putting pressure on other major items and necessities under higher costs. The UN Food and Agriculture Organization’s meat-price index has risen 10% since the beginning of the year, a record in April. In the United States, bacon, chicken breast and ground beef have never been more expensive.

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Global production of chicken, pork and beef will grow 1.4% in 2022, up from 5.4% last year, the U.S. government forecast.

Justin Sherrard, a global animal-protein strategist at Rabobank, said: “The personal pressures we’re facing aren’t really new or unusual. “It’s a combination of problems with the issue.”

Russia’s aggression has slowed Ukraine’s grain exports at a pace that has cut off corn supplies, which depend on major hog producers such as Spain and China. The lion’s share of the cost of raising livestock is fed, and even for countries that produce their own, crop prices have risen dramatically. Chicago corn futures are up 31% this year; Paris corn futures are up 55% and UK feed-wheat futures are up more than 50%.

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Read also: Russia’s war is redesigning $ 120 billion global grain trade

“I’ve never seen anything like it,” said Jamie Wiley, a Scottish pig farmer whose farm typically markets more than 70,000 pigs a year. “Things have gotten really bad in the pig industry since last year. This means that humans, if they have any, are burned at the stake. “She is cutting off her breeding sails to prevent injury.

According to Joe Davis, chief executive of the National Pig Association of the United Kingdom, wholesale pork prices in Britain have risen, but do not cover production costs, leading farmers to an “unprecedented” sixth-quarter loss. Pig farmers in the UK are already suffering from a labor shortage at the meat plant that held more than 100,000 pigs for slaughter earlier this year. Farmers have killed animals as they have run out of farmland. As the situation improved, so did Russia.

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Rupert Claxton, meat director at Consultant Gira, said the conflict “extended a whole range of things we were already fighting.” “This has changed it from a stress level of seven to a stress level of 10.”

In the European Union, the world’s top exporter, pork output will fall 3% this year, the first drop since 2019, the government estimates. Rising prices are not offsetting costs, perhaps forcing farmers to slaughter animals earlier than usual.

Late last year, pig herds in Germany became the smallest since 1996, and AMI analyst Tim Koch expects the decline to continue this year. The outbreak of African swine fever – mainly in wild pigs – has led to export bans on German pork and disappointing prices. After the increase in feed and energy costs, Koch said, most pig farmers will need a price of about 2 to 2.40 euros per kilo to be profitable, up from 1.60 to 1.70 at normal times. The price is just under 2 euros.

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“Almost everyone from producers to slaughterhouses is working really carefully, buying a little less pigs, trying not to invest too much money at the moment,” he said.

In China, half of the world’s pork habitat, record feed costs, and prolonged slump in pork prices have caused surprising losses to top hog breeders. After recovering from a deadly swine fever outbreak, it is in recession again, with sowing numbers declining for eight consecutive months.

Some farms may bear the cost, but disease and drought are still taking a toll. An avian influenza outbreak across the Northern Hemisphere has killed nearly 38 million birds – mostly turkeys and laying hens – in the United States, one of the worst outbreaks of all time. France’s southwestern foie gras region has also been hit hard for the second year in a row, with Polish poultry farms being sued.

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Bad weather is an additional hurdle. In southern Alberta, droughts have ravaged pastures and croplands over the past year. Reg Shellenberg, president of the Canadian Cattlemen’s Association, said that with the dry season in some areas leaving for the third year in a row, farmers and ranchers have already used any stored feed and brought in cash.

“There’s little feed to purchase and if it’s available, it’s incredibly expensive,” he said.

Western Canada’s grain production has fallen by 40%, which has increased feed costs and forced producers to import supplies from the United States. Jacob Buicart, chair of the Alberta Cattle Feeder, said it costs an extra C $ 400 ($ 311) per animal feed in the winter.

“It’s very difficult to do cattle business now,” he said. “We are losing from every angle. We don’t have food unless it rains through another winter. “

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In Argentina, wildfires killed 700,000 cattle in February and March, while pastures across the Pampas farm belt were hit by droughts that reduced calves and pushed livestock to a six-year low.

Richard Findley, head of the National Farmers Union Beef and Sheep Board, said British cattle and sheep, which rely heavily on grazing, will not have enough pasture to survive the winter because expensive fertilizers will spread less in the case of pastures or hay. . He hopes that some farmers will have no choice but to slaughter cattle this year, possibly reducing the number of cattle by 5% or more.

Joe Healy, a dairy farmer with about 100 cows in Galway on Ireland’s west coast, said the price of fertilizer was hitting him hard.

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“Last year I bought nine tons of urea for 2,880 euros; Nine tons of urea in the same week this year is 6,100 euros, ”he said.

Those rising costs will make their way to the isles of the supermarket.

Tyson Foods Inc., the largest meat company in the United States, has warned of a shrinking supply. “Heavy cattle liquidation from year to date” will affect supply for two to three years, Shane Miller, president of Fresh Meat, told an investor.

“Producers can’t afford the full cost,” said Uple Galketti Arachelage at the FAO. “It’s very likely we see consumers paying more, at least for the foreseeable future.”

© 2022 Bloomberg LP



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