According to the survey, corn represents only 16% of the final price of pork, 23% of poultry, 11% of beef and 6% of milk, while wheat contributes 13% of the price of bread. “In recent times, due to the Russia-Ukraine war, there was an increase in grains and the discussion of inflation is mistakenly diverted to that side: the increase in food prices is associated with the rise in prices of corn or wheat, but this relationship is not what determines what the products come out. This study shows that the impact is much less than is believed”, explained Natalia Ariño, FADA Economist.
Another key issue is the weight of the taxes on final food prices. The study shows that for beef, 28% of the final price is chain taxes. In French bread, the tax burden reaches 23%, while the whole milk sachet has a tax backpack of 26% of what consumers pay. The truth is that at this point there is also another item to analyze, because while the prices of the products that make up the basic basket do not stop rising, in the opposite village the taxes paid by the national or provincial governments did not change. significant.
In short, the values that Argentine consumers pay for bread, milk or meat have a high tax component, but this would not be the factor that explains the remarcation in the gondolas.
“At times when inflation accelerates, there is a tendency to discuss prices, the chain and costs, but in reality the problem is not one price in particular but the peso itself, our currency loses purchase value, the problem is much wider. The FADA economic team defines three points to explain it: “First, we have a deep fiscal deficit, second, this is financed by issuing pesos, and thirdly, lack of confidence is added, this situation translates into pesos that are worth less and less: that is inflation”, they explain from FADA.
The role of the chain
The work shows that, in the price of the whole milk sachet, the dairy represents 35%, the industry 32%, commerce 7% and taxes 26%. Here, then, the value concentration in the industry where few companies operate and by themselves make up 32% of the final value of the product.
Meanwhile, of the total that the consumer pays per kilo of French bread. Wheat represents 13%, the mill 4%, the bakery 60% and taxes 23%. So, in the bakery and its costs associated with labor, rent or energy is where the remarcation of values could be understood.
“The jump that occurs in the bakery This is due to the fact that two processes are combined in this link: production and marketing. It has an intensive use of labor, utility costs and rental costs. Additionally, the scales of production throughout the chains are different, while wheat and flour are made on a large scale, in the bakery it is done in a more traditional way, so unit costs are higher”, FADA warns. .
Finally, it is recorded that in the average price of meat, breeding represents 28%, feedlot 29%, refrigerator 5%, butcher 10% and taxes 28%. Corn represents 11% of the price of a kilo of meat at the counter. In this last point, it appears then that the breeding and the feedlot they play a strategic role along with taxes and not so much the meatpacking industry.
In any case, beyond the distortions that can be found in the chain and that fully impact the final price of food, the answer to inflation is not one. Because although commodities are not the ones with the greatest incidence, high prices and the availability of raw materials in the market do play a key role, while in addition the business concentration that is evident in sensitive items such as flour, oil or dry pasta are also issues to consider.