The world’s largest meat producer said beef prices would remain stubbornly high throughout 2022 despite President Biden’s attempt to arrest price increases ahead of the midterms elections this fall.
On Tuesday, Andre Nogueira, chief executive of Brazilian meat company JBS SA’s U.S. division, told investors that high U.S. beef prices would be sticking around amid robust domestic demand, high overseas shipments, and lower cattle supplies.
Nogueira ruined hopes that beef prices would decrease in the coming months as consumer inflation is at a four-decade high, and food prices are at record levels. He said beef prices for U.S. consumers are high because retailer margins are above historical levels.
Despite high beef prices, Nogueira pointed out consumer behavior has yet to change, suggesting prices must go even higher to reach the threshold of demand destruction.
Strong demand for beef has allowed JBS to pass on higher grain costs to consumers. A labor shortage is still a lingering problem for the company even two years after the virus pandemic.
On Monday, JBS SA’s CEO GilbertoTomazoni said the main drivers of cost surges include everything from fuel to animal feed to packaging to transportation and labor shortages.
Gilberto Tomazoni said the invasion of Ukraine has disrupted global supply chains and triggered added cost pressures.
“We are focusing on things that we are able to control,” he said. “Costs have risen significantly.”
Tomazoni is right about soaring costs as a commodity shock was felt just weeks ago.
Even though JBS reported record revenue in the fourth quarter, beating the Bloomberg consensus estimate, the cost of doing business skyrocketed.
According to consolidated earnings released Monday, production costs increased 21% in the quarter from a year earlier, while sales expenses soared 40%. The U.S. division for beef saw costs in the quarter jump 40% per head.
Meanwhile, the Biden administration takes no blame for higher inflation. They blame soaring meat prices on meat processors and soaring gas prices on Putin. The press has been quiet when it comes to the incompetence of the Biden administration as they fail to cap inflation as it crushes the working poor households the hardest.
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