Consumers Opt for Cheaper Protein

The impact of COVID-19 on the meat sector in Mexico has so far manifested itself in the fall in demand for meat products. According to Grupo Consultor de Mercados Agrícolas, consumers are opting for chicken and increasingly for eggs and other vegetable-based proteins, instead of pricier beef and pork. This trend is expected to accelerate over the coming weeks. These are times of economic uncertainty, with rising levels of unemployment. GCMA reports that 370,000 people have been laid off as a result of the pandemic, a number which is expected to grow exponentially as the epidemic worsens. Slaughterhouses have already lowered the number of animals slaughtered.

In several states, local meat prices have dropped significantly. Early April, it was reported that beef prices in Durango had dropped by 25 percent due to less demand. Last week, beef prices in Queretaro dropped by 27 percent and chicken has seen a 13.5 percent fall. Carl Heinz Dobler, minister for rural development in the Queretaro administration, announced a drop for all meat-based products. Vegetables and fruits, on the other hand, have seen little effects. The minister links the fall in tourism in the state to the drop in meat consumption. As restaurants have shut, a primary point of sale has dried up. The administration is now looking at generating new sales channels, such as online sales, to divert products. In addition, it will launch more promotion of the local meat sector.

As meat consumption is seeing a drop nationwide, with other states reporting dropping prices, the impact on businesses across the supply chain will grow. GCMA points to four different measures that the government could take to fortify the sector in the face of lower consumption. Firstly, it advises a minimum income for vulnerable population groups and the unemployed. This would guarantee that the basic food basket remains accessible to households. The second measure is to facilitate a mechanism that allows businesses to restructure their loans or defer their payment. This is something which has already been initiated by several banks. Thirdly, it suggests the return of rent taxes and aggregate value taxes, suggesting that this would increase the liquidity available to business. Lastly, the agency is advising the government to strengthen the efforts of the food health and safety agency SENASICA, to improve sanitary inspections for food safety.

In the US, one of the reasons why meat processing plants have been overrun by the COVID-19 pandemic is because there is no agency responsible for monitoring and testing employees working in essential jobs across the food supply chain. With a lack of responsive and accurate oversight, plants are more vulnerable to outbreaks. Mexico, so far, has not seen a major impact of COVID-19 in the middle of the supply chain, where animals are slaughtered and processed. However, the situation in the US, where multiple plants have been forced to close, could be replicated in Mexico. This situation highlights the importance of testing humans, not necessarily food products. Particularly now, before the virus forces entire plants and business to shut down, a proactive and aggressive employee screening approach could help control some of the spreading patterns.