Wednesday, September 19, 2012

Prepare for Soaring Meat Prices

Farmers across the world have begun a mass slaughter of their pig and cattle herds because they cannot afford the cost of feed, which has soared following the worst US drought in living memory, according to a report published by the investment bank Rabobank, reports the Guardian.

Rabobank warns that the mass "herd liquidation" will contribute to a 14% jump in the price of the average basket of food by next summer.

Rabobank said the slaughter of millions of pigs has already led to a 31% increase in the price of pork and the costs of other meats are also expected to soar as "US livestock herds are likely to be liquidated at an accelerating pace in the first half of 2013".

Nicholas Higgins, a Rabobank commodities analyst and author of the report, said: "There will be an initial glut in meat availability as people slaughter their animals to reduce their feed bills. But by next year herds will be so reduced that there won't be enough animals to meet expected demand and prices will soar."

US farmers, who are suffering from the worst drought since the 1930s, have already reduced their cattle herd to the smallest since 1973.

The report said the mass slaughter of pigs had led to a steep decline in the price of pork for delivery next month, but a 31% increase for pork delivered in July 2013.

Because meat and dairy products already account for 52% of the cost of the average global basket of food Rabobank predicts the overall price of the basket will soar to a record 243 on the United Nations Food and Agriculture Organisation (FAO) index next summer.

If Bernanke's current QE operation kicks in and the money doesn't end up in excess reserves, the year 2013 may be a year of perfect storm price increases.


  1. If you want a good steak, eat it now...

    Dairy farmers will work hard to preserve their herds, but since beef farming is typically a marginal business anyway, a lot of beef will be slaughtered or just not replaced.

    BTW, this will cause a further concentration in farm land.

    It is both ironic and fitting that the government induced recession tends to cause more concentration in wealth, which in turns causes the Left to cry about income inequality and more government interference to correct it.

  2. It is unfortunate the drought and impact on herd size will be available for central bankers and planners to place ALL blame and again deny their policies have any contribution to price inflation.