For the price of a kilo of roast, you can buy almost 4 kilos of chicken

With almost 4 kilos of chicken, only one roast is boughtaccording to a report from the Rosario Stock Exchange (BCR), in the context of the fall in consumption of bovine cuts, which was prepared by analysts Alberto Lugones, Desiré Sigaudo and Emilce Terré

“The roast/whole chicken ratio It went from a value of 1.95 in January 2007, implying that with almost two kilos of chicken they bought one roast, to 3.93 in February 2022″, detailed the entity from Santa Fe.

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The roast/pork brisket ratio it had a value equivalent to 0.85 in January 2007, meaning that the pork cut had a higher price than the kilo of roast. Then, the relationship was reversed and, in the second month of 2022, this ratio gave a result of 1.48, which is why almost 1.5 kilos of pork breast are needed to buy a kilo of roast.

Source: BCR

Meanwhile, the “pork/chicken breast” ratio had moments of increases and decreases over the last 15 years, with peaks above a value of 3, although the maximum occurred in April 2008 with a value of 3, 8.

However, since January 2018, 3 kilos of chicken have not been exceeded for each kilo of pork breast. The latest record to date, corresponding to february 2022results in a value of 2.7, implying that 2.7 kilos of chicken are required to acquire one of pork, the Stock Exchange reported.

Beef was the most expensive in real terms

On the other hand, the entity from Santa Fe analyzed the development of the prices of representative cuts of the 3 types of meat to check if, indeed, there is “a relative rise in the value of beef that partially supports the decrease in its consumption” .

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In this framework, the BCR stressed the importance of national cattle stock when defining the value of beef cuts. For its part, the National Ministry of Agriculture reported that the stocks with which it ended 2021 were 53,416,435 headsresulting in a decrease of just 100,000 heads compared to 2020. Although this data marks “the third consecutive year of decline in cattle stocks in our country after reaching a last maximum in 2018 (55 million head)”.

As representative cuts of the 3 meats, roast, pork breast, and whole chicken were taken, whose values ​​are reflected in pesos per monthly kilo obtained from Institute for the Promotion of Argentine Beef (IPCVA).

Source: BCR
Source: BCR

These prices were adjusted by the Reference Stabilization Coefficient (CER) to obtain “constant prices in order to alleviate the effects of inflation on nominal terms”.

Thus, it is observed that the price of the roast in real terms, that is, adjusted for inflation, multiplied almost 5 times between January 2007 and February 2022, going from $4.57 to $22.4 per kilo, and thus evidencing a rise of 389%. “In the same period, the kilo of chicken went from $2.3 to $5.7 (+143%), while the breast of pork rose from $5.3 to $15.1 (+182.1%)”.

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“In other words, Within Argentina, all animal proteins increased their real values, although this occurs in different magnitudes depending on the type of meat. Consequently, it could be affirmed that beef was the animal protein that saw its real prices increase the most, followed by pork and finally chicken,” the report reported.

The analysis of Sergio Lapegüe, Valeria Sampedro, Adrián Ventura and Mauricio Bártoli.

Then, the analysis indicated that the variations of the relative prices between the different types of meat, denotes that the bovine cuts presented increases with respect to the poultry and pork. “While it could be said that in the long term there is a lateralization in the relationship between chicken and pork breast,” the report considered.

Meat consumption fell along with the deterioration of wages

For a long time, the demand for beef in Argentina was characterized by having a low income elasticity. In other words, the population did not change their meat consumption to a great extent when their income contracted. Thus, unlike other food consumption such as dairy products, the demand for bovine meat became independent of the level of average wages.

“However, in the last decade there has been a change in this direction, and the consumption of beef has a closer relationship with salary,” the report said.

Source: BCR
Source: BCR

A) Yes, meat consumption has replicated the variations in real wages in the last decade (using in this case the GDP deflator to make the adjustment) and, like the latter, it has shown a clear downward trend. “In other words, meat consumption fell as the real purchasing power of average wages in the country fell”.

In fact, if the correlation between these two variables is measured using a regression, it follows that 77% of the variation in beef consumption since 2010 is explained by fluctuations in real wages.