Global Beef Prices on the Rise

Published 2021년 6월 8일

According to reports from the UN's World Food Programme, the price of beef has risen globally, contributing to the rise in global food prices. The current skyrocketing of global food prices is considered the highest level since 2014, with global economies still reeling from the effect of COVID-19. The soaring beef prices were mainly attributed to strong demand from China, insufficient cattle supplies in certain countries, a lack of abattoir workers, and increasing feed costs.

Chinese demand for beef

Argentina, the second-largest beef exporter to China following Brazil, recently ceased exports for a month due to runaway inflation, leading to farmer protests. According to La Cámara de la Industria y el Comercio de Carnes y Derivados de la República Argentina, the country’s meat industry chamber, increased demand from China reduced beef supplies in Argentina. This reduction in supplies led to prices rising by over 60% in a year, with per capita consumption declining to a 100-year low in April. According to China's General Administration of Customs department, during the initial four months of 2021, China imported more than 178K tonnes of beef from Argentina, rising from about 152K tonnes during the previous year.

Outbreaks of the African swine fever (ASF) have depleted the Chinese pig herd since 2018, resulting in increased meat imports. At the same time, relations have deteriorated between China and Australia, its third-largest supplier. This led to China suspending some beef imports from Australia between 2018 to 2020. As a result, Chinese importers had begun depending more on alternative suppliers. According to recent updates from the US Department of Agriculture (USDA), US beef exports to China reached a record high level in 2021, amounting to 14,550 tonnes in March.

According to Rabobank, a global leader in food and agriculture investment and sustainability-oriented trading, the demand for beef has also been driven by the growing middle class in China. Beef is not just consumed in restaurants but has become increasingly popular for home cooking. According to data from China's Ministry of Agriculture and Rural Affairs, beef prices in China in late April (2021) increased by 4.4% compared to the year before, while pork prices were down 27.9%. The Chinese market is favorable for Argentina and Brazil due to currency depreciation and weakening local demand. This results in higher exports to China from these countries, reducing their domestic supplies and driving up prices.

Increasing feed costs and limited domestic supply

According to Embrapa, the Brazilian government's agricultural research agency, prices for beef cuts in the country have risen by approximately 30% over the past year due to limited cattle supplies and strong export demand. Together with Hong Kong, China purchases 60% of all beef exported by Brazil. The high prices have caused a 14% decrease in domestic beef consumption from pre-pandemic to a 25-year low. Consumers are resorting to cheaper alternatives such as pork and chicken.

Meatpackers and producers in the US face higher livestock feed costs, with prices for soy and corn at around eight-year highs. The cost of feeding herds has risen by at least 30%. As a result, beef producers are increasing prices, which will have a ripple effect through supply chains and continue to lift beef prices globally. In the US, livestock operations have begun to contract due to slim profits amid the pandemic. Increased restaurant demand is also boosting beef prices as COVID-19 restrictions ease.