The latest CPI figures from the U.S. this week showed meat prices are rocketing higher. Consumers are wondering when will rapid food inflation end. The world's largest meat processor warned that labor shortages are crimping production growth, pushing prices higher, according to Bloomberg.
Brazilian company JBS S.A. has meat processing plants worldwide. One of its challenges is labor shortages in every developed country, resulting in limited production and increasing costs.
On Thursday, Andre Nogueira, head of JBS SA's U.S. division, said the problem is most severe Stateside as labor shortages are expected to persist into the new year. He said the lack of workers also impacts operations in Europe, Canada, and Australia.
"Labor shortages are holding back production growth," Nogueira said. "This is a key issue for the industry." He added the shortages weren't cutting into current production capacity, but the lack of workers inhibits the company's ability to expand output if needed.
"JBS USA has a full team in pork and beef operations, though that doesn't mean his division is delivering the same level of production using a similar number of employees as in the past," Nogueira said, adding that workers are opting out of weekend shifts.
Earlier this week, JBS reported earnings and posted third-quarter net income that topped analysts' expectations due to the strengthening U.S. meat market and increasing exports to China. However, the company harped on the issue of rising operation costs due to labor woes and higher commodity prices.
Elsewhere, Nogueira said JBS controlled companies in the U.K. faced a shortage of workers and truck drivers. "It's a structural adjustment in the meat industry," he explained.
News that meat prices are rising comes as global food inflation hits fresh decade highs. Simultaneously, U.S. Consumer prices increase at the fastest rate in 40 years, partially due to soaring food prices.
In return, soaring inflation, if that's food, energy, shelter, and vehicles, fuels a period of discontent among Americans that are showing up in presidential polling data.
For now, meat prices are likely to stay elevated as the world's largest processor has no wiggle room to increase output due to labor woes. So much for "transitory" inflation. Expect to pay some of the highest food costs in more than a decade this holiday season.