The loosening of quarantine in many countries has attracted attention to a possible recovery of the world economy. But, first of all, the scenario involves a political, consumption and production analysis, including when we think about the panorama of the post-covid-19 livestock market.
With a sincere view on the theme, Professor Thiago Bernardino, of the MBA in Agribusiness USP/Esalq, explains that many producers are still motionless in the face of uncertainties. Despite influencing the decisions, the moment lived so far is also a reference for learning, including thinking about economy and livestock.
“The main message is to know what we want to be in five or 30 years. This crisis brought us many questions and a look at what will still change”, he recalls.
Therefore, the professor listed the following characteristics that will be part of the post-pandemic world, in which cattle stands out within production and consumption of food:
- Changes in eating habits
- Domestic protection x production efficiency
- Redefinition of essential sectors
- Protagonism of food suppliers countries
- Importance of sanitation topics
- Window of opportunities for opening new markets.
What does this mean?
Of all the points presented by the professor, the greatest emphasis goes to changes in eating habits, which does not necessarily mean that the whole population will continue to eat and cook at home for “fear” of eating out.
“What happens is that people will be more careful with their food, whether it is from the restaurant or the market. This includes livestock, from the production chain to the distribution and supply”, explains Bernardino.
In the issue of domestic production, the professor warns about the closure of some productive markets in the benefit of local production.
“The post-coronavirus world will need cheap food, because much of the funds have been allocated for the control of the disease. So, if there are trade barriers and a different consumption, in which health and food became essential, how to make agribusiness an essential sector again? Where to begin? Which equipment will be necessary for this?”, he observes.
Countries that already have a volume of food in quantity, quality, diversity and sanity will have to worry about meeting demands focused more and more on care, since the world is looking at food safety.
“In all of this, windows of opportunities are opened for new markets. If the whole world is watching Brazil for political and environmental preservation issues, for example, it is also looking at what the country will do for food production, because we all need food”, the professor recalls.
In the panorama of the post-covid-19 livestock market, the professor reinforced how some sectors that do not have exportation will suffer more with the current recession and with the slower resumption in a short term.
For Bernardino, there are two important things in post-covid-19 livestock to be observed. First, the producer and industry, who are constantly concerned about prices and productivity. “Price is important, but if I want a healthy and sustainable production in ten years, I have to focus on producing with quality now”, he says.
Political economy, price of the bags of corn, soybeans, cattle, calf and so many other factors are pointed by the professor as events out of the control for those who produce, because they depend on the amount of buyers and sellers.
“There is a market dynamism that goes beyond the day to day of decision making, because it oscillates a lot. But I have the internal control, within the farm, industry and office. We need to focus on management not only of the cost, but of the herd, think about what I will produce and for whom”, recognizes the professor.
The marketing management involves looking forward, including to prices that oscillate all the time. Therefore, Bernardino states that the best way to try to protect yourself is with planning. “Because if I go to the market, it is done by demand and offer, how much my consumer wants to pay and how much I have to offer.”
To facilitate, it is worth paying attention to the following points before thinking about price increase:
- Is my consumer also happy with this increase?
- Will he want to continue buying from me?
“This is important for the health of the market because I can’t compete with the demand knowing I have competition. The market is open and therefore we need to stay attentive to which limit we can reach with this price and how long the consumer will be able to pay it”, warns Bernardino.
What else should we pay attention to?
In the next months, the answer to this question is to dedicate attention to the relationship between USA and China, which are heading to a commercial war. As explained by Bernardino, the two nations depend on each other, but there is inflexibility by the US representative.
“We should think about how this [situation] will look like if he doesn’t win the 2020 elections and what impact will be left for other countries of livestock.”
Finally, the second point of attention mentioned by the professor is directly related to the exchange, which currently benefits the export and makes Brazil more competitive in the external market. However, what happens if there is a drop in the quota? And how are consumers left in the internal market?
“In terms of production, we are one of the largest in the world, so we have a fundamental role in the process. We have volume and offer, but it is good to stay attentive to a possible fall in the exchange rate and to think about how to sell internally. This goes for any country of Agribusiness”, he informs.
Economy and consumption of meat
Much of the consumption of animal protein is linked with income. Therefore, a growth of jobs in any country means an increase in the consumption of protein, including beef.
Another point related by the professor to the world macroeconomy is that, among all the commodities produced by the countries of Agribusiness, only food did not have devaluation. Brazil, as one of the world’s food providers, has a very interesting role in this.
“But thinking internally, a population without income has no purchasing power and cannot support the internal trade. What can happen with the post-pandemic and with the retraction of income while a resumption of the world before the pandemic does not happen effectively? This is the great issue”, finalizes the professor.
Want to know more about the panorama of the post-covid-19 livestock market? Share your doubts in class. We are prepared to answer you!