Woolworths reveals the everyday product set for a price spike
The weekly grocery bill is set to increase with meat at Woolworths in for a price surge.
Woolworths CEO Brad Banducci told the supermarket's Half Year 2021 Earnings Conference Call last week “there’s immense volatility out there”.
“We do expect to see continued meat price increases, and meat has been very challenging, as you know,” Mr Banducci said.
“And really, we’ve seen with the rains we’ve had that a lot of cattle has been kept on the land.
“And so there will be continued meat price pressure coming through in the short term given that there’s a six-year cycle in growing conditions on these things for red meat.”
Why are meat prices going up?
According to Meat and Livestock Australia’s Cattle Industry Projections (MLA), the national herd is set to increase by two per cent.
“Improved seasonal conditions in southern Australia throughout 2020, and above-average summer rain in northern Australia during the 2020–21 wet season, are expected to produce an abundance of pasture in all major cattle producing regions, with the exception of parts of WA,” the report reads.
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With more rain in 2020, and after years of drought, many producers are still looking to rebuild their herds in 2021 meaning less meat going from the field to the dinner plate.
According to the Bureau of Meteorology, many parts of southern Queensland, southwest Victoria, southeast Western Australia and northern NSW were either in severe rainfall deficiency or the lowest on record between January 1, 2017 and January 1, 2021.
MLA expects calf slaughter to drop by 7 per cent “demonstrating producer preferences to hold onto young cattle rather than turn them off into the vealer market”.
“Cattle supply is expected to tighten in 2021, as producers retain more breeding stock to rebuild their herds,” the report reads.
“The increase in heifers being retained for breeding purposes will cause the female slaughter percentage to drop in the second half of 2021, this is expected to fall below 47 per cent, signalling a technical rebuild.”
As for whether the cost of meat going up could be offset by other groceries, such as fruit and vegetables going down, Mr Banducci said it is “something we can’t talk to, but we’ll work it through”.
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