This year has seen a substantial year-on-year increase in the retail price of meat products, especially red meat, as the industry recovers from the lost production experienced in 2020, as a result of the Covid-19 pandemic.
This was according to Reaaz Ahmed, owner of Good Hope Meat Hyper, a prominent meat supplier in Cape Town.
“Farmers that came through the drought now suddenly had to cope with severe veld fires that may also cause a shift in the supply of animals to the market as there is a shortage of grazing on a national level,” said Corine Steyn, manager liaison at Red Meat Producers’ Organisation. PHOTO: Sourced/Beefmaster
There has been a 12% average year-on-year increase in the price of beef carcasses from January to August 2020 to the same period in 2021, according to Marion Delport, lead data scientist at the Bureau for Food and Agricultural Policy (BFAP). The consumer price index, on the other hand, saw inflation of 5% for the same period, according to StatsSA’s September statistical release.
“An additional seasonal price increase [on meat] is expected towards the end of the year due to increased festive-season demand,” said Delport in email correspondence.
International demand
In 2020, there was an increase in the international demand for South African (SA) meat, which caused a shortage in local supply, said Ahmed.
“Given the quality, flavour and select cuts of our beef products, [they] are in demand all over the world,” said Roelie van Reenen, supply chain executive of the Beefmaster Group, one of SA’s leading suppliers of beef products, in a press release on the company’s website.
South African farmers over-exported as they received favourable prices overseas. This resulted in a much less future yield, commented Ahmed.
“We have a unique opportunity in South Africa to grow our export market”, said Van Reenen.
In 2021, there was a shortage of Mechanically Deboned Meat, which caused a major increase in processed meat prices, according to Reaaz Ahmed, owner of Good Hope Meat Hyper. PHOTO: Alexander Brand
Closures, droughts and fires
Another factor that has contributed to the rise in meat prices is the closure of some abattoirs, according to Ahmed. Covid-19 restrictions also reduced imports and impacted ports, he added.
As mentioned, there are several factors influencing meat production, but the current drought over large parts of central SA has an influence, because farmers had to decrease their herd numbers. Another factor was the severe veld fires during July and August nationwide, according to Corine Steyn, manager liaison at Red Meat Producers’ Organisation (RPO).
The supply of meat is lower due to decreases in the number of animals slaughtered, according to Marlene Louw, a senior agricultural economist for the Absa Group.
When comparing the cumulative slaughter numbers for beef in the Western Cape of 2020 and 2021 (January to August), there has been a decrease of 5%, from 76 975 to 73 294 cattle, according to Delport. A decrease of 3%, from 1 658 537 to 1 614 304, was seen in SA at large. Cumulative sheep slaughter numbers decreased by 6%, from 2 749 230 to 2 594 024, in SA, she added. The same applies to the Western Cape, which decreased from 653 274 to 616 997.
Both the decrease in supply and substantial increase in the price of grains added to the price increase because, in meat production, these serve as inputs for feedlots, broiler houses and piggeries, according to Louw.
On average for 2021 (January to August) the highest year-on-year inflation was observed for mutton and lamb, followed by beef and pork, with the lowest inflation observed on chicken meat, according to Marion Delport, lead data scientist at the Bureau for Food and Agricultural Policy. PHOTO: Alexander Brand
It is important to note that the national cattle herd is currently in a phase of herd rebuilding, which also contributes to slightly lower slaughter numbers, according to Delport.
The national beef cattle herd size is an estimate but both the industry and government agree that it is close to 13 000 000 hd, according to Dewald Olivier, executive officer of the SA Feedlot Association. This number changed due to the 2015/2016 nationwide drought, he added.
“Following the severe drought in 2015/16, increased slaughtering reduced the national herd size by 15%. Some areas are still affected by drought conditions and the industry is only gradually starting to rebuild its herd size,” said Olivier.
Herd rebuilding involves increasing the national herd over and above inventory numbers, after restocking took place, according to an article by AgriLife Today.
Disaggregated meat expenditure
According to Delport, the increase in the price of meat, combined with severe pressure on the disposable income of households, would likely decrease the consumption of more expensive meat options. This applies to red meat in general, but specifically the more expensive cuts such as beef, steak and chops, which will potentially be replaced with chicken, eggs and budget fish options, such as canned pilchards.
“Lower supply leads to higher prices which then, in turn, cause consumers to adjust their demand for meat downward,” said Louw.
A socio-economically disaggregated view on meat expenditure in South Africa. GRAPH: Supplied/BFAP
Of all lamb and mutton consumed in SA, 63% is consumed by the country’s affluent socio-economic group, compared to merely 3% by the low-income group, according to BFAP calculations based on household-level expenditure data. For chicken, on the other hand, the numbers are 27% and 15% respectively.
On average for 2021 (January to August), the highest year-on-year inflation was observed for mutton and lamb (13%), followed by beef (10.5%) and pork (7%), with the lowest inflation observed on chicken meat (6%), Delport told MatieMedia.