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David Spies SAFA 9 MRT

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					          Meat Industry Overview
South African Feedlot Association
         Annual General Meeting

                      9 March 2010
                         David Spies
Contents
• International trends
   –   Production
   –   Consumption
   –   Trade
   –   Price trends
• Domestic trends
   – Production
   – Consumption
   – Trade
   – Price
• Feedlot
   – Short term perspective
   – Scenario’s
• Challenges
                              2
International trends




                       3
       Beef and veal: Production

            14,000


            12,000


            10,000
                                                                                                                                                                        Australia
                                                                                                                                                                        Argentina
             8,000
'000 tons




                                                                                                                                                                        Brazil
                                                                                                                                                                        China
             6,000
                                                                                                                                                                        EU
                                                                                                                                                                        India
             4,000
                                                                                                                                                                        South Af rica
                                                                                                                                                                        USA
             2,000
                                                                                                                                     SA 685
                0
                                          2002
                                                 2003
                                                        2004
                                                               2005




                                                                                                  2010
                                                                                                         2011
                                                                                                                2012
                                                                                                                       2013




                                                                                                                                                          2018
                                                                                                                                                                 2019
                     1999
                            2000
                                   2001




                                                                      2006
                                                                             2007
                                                                                    2008
                                                                                           2009




                                                                                                                              2014
                                                                                                                                     2015
                                                                                                                                            2016
                                                                                                                                                   2017
  Source: FAPRI, 2010
                                                                                                   4
    Beef and veal: Production

                           SSA
                           LDC
                          Africa
                   South Africa
                    Developing
                Asia and pacific
   Latin America and Caribbean
                          World                                                 2010-2019
            Oceania developed                                                   2000-2009
                    North Africa
                 North America
                     Developed
                        Europe

                                   -2   -1   0       1   2   3   4   5      6
                             Average annual growth rate/ least squire (%)


Source: OECD FAO, 2010                           5
 Beef and veal: Consumption

             14000


             12000


             10000
                                                                                                                                                                            Australia
                                                                                                                                                                            Argentina
             8000
  '000 ton




                                                                                                                                                                            Brazil
                                                                                                                                                                            China
             6000
                                                                                                                                                                            EU
                                                                                                                                                                            India
             4000                                                                                                                                                           South Af rica
                                                                                                                                                                            USA
             2000
                                                                                                                                                SA 836
                 0
                     1999
                            2000
                                   2001
                                          2002
                                                 2003




                                                                                                             2011
                                                                                                                    2012
                                                                                                                           2013
                                                                                                                                  2014
                                                                                                                                         2015
                                                                                                                                                2016
                                                                                                                                                       2017
                                                                                                                                                              2018
                                                        2004
                                                               2005
                                                                      2006
                                                                             2007
                                                                                    2008
                                                                                           2009
                                                                                                      2010




                                                                                                                                                                     2019
Source: FAPRI, 2010
                                                                                                  6
 Beef and veal: Consumption

                         SSA
                        Africa
                         LDC
                  North Africa
          Oceania developed
              Asia and pacific
                  Developing
                 South Africa                                            2010-2019
 Latin America and Caribbean                                             2000-2009
                        World
                   Developed
                North America
                       Europe

                                 -1   0    1      2     3      4     5
                          Average annual growth rate/ least squire (%)

Source: OECD FAO, 2010                     7
Overall increase in per capita meat consumption
between the 2007-09 period and 2019




  Source: OECD FAO, 2010
                               8
 Beef and veal: Per capita consumption

                80


                70


                60
                                                                                                                                                                        Australia
                50                                                                                                                                                      Argentina
    Kg/capita




                                                                                                                                                                        Brazil
                40
                                                                                                                                                                        China
                                                                                                                                                                        EU
                30
                                                                                                                                                                        India
                                                                                                                                            SA 17.23                    South Af rica
                20
                                                                                                                                                                        USA
                10


                0
                     1999
                            2000
                                   2001




                                                               2005
                                                                      2006
                                                                             2007




                                                                                                         2011
                                                                                                                2012
                                                                                                                       2013




                                                                                                                                                   2017
                                                                                                                                                          2018
                                                                                                                                                                 2019
                                          2002
                                                 2003
                                                        2004




                                                                                    2008
                                                                                           2009
                                                                                                  2010




                                                                                                                              2014
                                                                                                                                     2015
                                                                                                                                            2016
Source: FAPRI, 2010
                                                                                                    9
 Beef and veal: Per capita consumption

           Oceania developed
                  South Africa
                          SSA
                         Africa
                   North Africa
               Asia and pacific
                          LDC
                   Developing                                                  2010-2019
                        Europe
                                                                               2000-2009
                    Developed
  Latin America and Caribbean
                         World
                 North America

                                  -2   -1    0     1      2      3         4
                            Average annual growth rate/ least squire (%)

Source: OECD FAO, 2010                      10
 Imports 2009




Source: ITC, 2011   11
 Exports 2009




Source: ITC, 2011   12
 Beef and veal: Imports

                  North Africa
                        Africa
                  Developing
              Asia and pacific
                       Europe
                        World
                         SSA
 Latin America and Caribbean                                               2010-2019
                North America
                                                                           2000-2009
                   Developed
          Oceania developed
                 South Africa
                         LDC

                                 -20   -15   -10    -5   0   5   10   15
                          Average annual growth rate/ least squire (%)

Source: OECD FAO, 2010
                                               13
 Beef and veal: Exports

Latin America and Caribbean
             Asia and pacific
                 Developing
               North America
                       World
                        LDC
                  Developed
                South Africa                                                  2010-2019
         Oceania developed
                                                                              2000-2009
                 North Africa
                      Europe
                       Africa
                        SSA

                                -20   -15   -10        -5   0   5   10   15
                         Average annual growth rate/ least squire (%)

Source: OECD FAO, 2010
                                                  14
                                                 80
                                                      90
                                                                                   140




                                                           100
                                                                 110
                                                                       120
                                                                             130
                                                                                         150
                                                                                               160
                                                                                                     170
                                                                                                           180
                                        1/1990
                                        7/1990
                                        1/1991




Source: FAO, 2011
                                        7/1991
                                        1/1992
                                        7/1992
                                        1/1993
                                        7/1993
                                        1/1994
                                        7/1994
                                        1/1995
                                        7/1995
                                        1/1996
                                        7/1996
                                        1/1997
                                        7/1997
                                        1/1998
                                        7/1998
                                        1/1999
                                        7/1999




                15
                                        1/2000
                                        7/2000
                                        1/2001
                                                                                                                 International meat price index




                                        7/2001




                     Meat Price Index
                                        1/2002
                                        7/2002
                                        1/2003
                                        7/2003
                                        1/2004
                                        7/2004
                                        1/2005
                                        7/2005
                                        1/2006
                                        7/2006
                                        1/2007
                                        7/2007
                                        1/2008
                                        7/2008
                                        1/2009
                                        7/2009
                                        1/2010
                                        7/2010
                               0
                                                        100
                                                                                             150
                                                                                                   200
                                                                                                         250




                                   50
                     1990-01
                     1990-11




Source: FAO, 2011
                     1991-09
                     1992-07
                     1993-05
                     1994-03
                     1995-01
                     1995-11
                     1996-09
                     1997-07
                     1998-05
                     1999-03
                     2000-01
                     2000-11




                16
                     2001-09
                     2002-07
                     2003-05
                     2004-03
                                                                                                               International meat price indexes




                     2005-01
                     2005-11
                     2006-09
                     2007-07
                     2008-05
                     2009-03
                     2010-01
                                                                   Pig Meat


                                        Ovine Meat
                                                     Bovine Meat
                                                                              Poultry Meat
International beef prices
            7,000



            6,000



            5,000



            4,000
  USD/Ton




            3,000



            2,000



            1,000



               0
                    1991

                           1992

                                  1993

                                         1994

                                                1995

                                                       1996

                                                              1997

                                                                     1998

                                                                            1999

                                                                                   2000

                                                                                           2001

                                                                                                  2002

                                                                                                         2003

                                                                                                                2004

                                                                                                                       2005

                                                                                                                              2006

                                                                                                                                     2007

                                                                                                                                            2008

                                                                                                                                                   2009

                                                                                                                                                           2010
                Bovine Meat (Argentina, frozen beef cuts, export unit value)              Bovine Meat (Japan, beef import price, cif, chilled beef cuts)
                Bovine Meat (USA, beef export, export unit value)



                                                                    17
Sources:S.A.G.P.y A. (Secretaría de Agricultura, Ganadería, Pesca y Alimentos), A.L.I.C. (Agriculture & Livestock Industries Corporation), U.S.D.A. :
U.S. trade exports
Local trends




               18
Local trends: Beef production and
consumption




Source: BFAP, 2010       19
  South African meat consumption




Source: BFAP, 2010      20
 South African meat consumption

                  2250
                         FAPRI, 2010
                  2000   Beef     21%
                         Chicken 27%
                  1750
                                        59%
                  1500
  Thousand tons




                  1250

                  1000
                            4%
                  750

                  500
                                                               24%                 23%
                  250

                    0
                              Beef             Chicken         Sheep meat           Pork

                              Average consumption: 2007-2009   Consumption: 2019

Source: OECD FAO, 2010
                                                         21
                                                                                                                Rand




                                                                     15000
                                                                                                                                                     23000




                                                                                  16000
                                                                                             17000
                                                                                                     18000
                                                                                                              19000
                                                                                                                           20000
                                                                                                                                    21000
                                                                                                                                             22000
                                                                                                                                                             24000
                                                           1970/71
                                                           1971/72
                                                           1972/73
                                                           1973/74
                                                           1974/75




Source: SARB & DAFF, 2010
                                                           1975/76
                                                           1976/77
                                                           1977/78
                                                           1978/79
                                                           1979/80
                                                           1980/81
                                                                                                                                                                     disposable income




                                                           1981/82
                                                           1982/83
                                                           1983/84
                                                           1984/85
                                                           1985/86
                                                           1986/87
                                                           1987/88
                                                           1988/89




                            Per capita disposable income


         22
                                                           1989/90
                                                           1990/91
                                                           1991/92
                                                           1992/93
                                                           1993/94
                                                           1994/95
                                                           1995/96
                                                           1996/97
                                                           1997/98
                                                           1998/99
                                                           1999/00
                                                                                                                                                                     Per capita beef consumption vs per capita




                                                           2000/01
                            Per capita consumption



                                                           2001/02
                                                           2002/03
                                                           2003/04
                                                           2004/05
                                                           2005/06
                                                                             15-16 kg/year




                                                           2006/07
                                                           2007/08
                                                           2008/09
                                                                     10
                                                                                     12
                                                                                                14
                                                                                                         16
                                                                                                                      18
                                                                                                                                   20
                                                                                                                                            22
                                                                                                                                                     24
                                                                                                                                                             26




                                                                                                              Kg/year
                                                                                                         Rand




                                                                     15000
                                                                                                                                         23000




                                                                             16000
                                                                                     17000
                                                                                             18000
                                                                                                     19000
                                                                                                                 20000
                                                                                                                         21000
                                                                                                                                 22000
                                                                                                                                                 24000
                                                           1970/71
                                                           1971/72
                                                           1972/73
                                                           1973/74
                                                           1974/75




Source: SARB & DAFF, 2010
                                                           1975/76
                                                           1976/77
                                                           1977/78
                                                           1978/79
                                                           1979/80
                                                           1980/81
                                                           1981/82
                                                           1982/83
                                                           1983/84
                                                           1984/85
                                                                                                                                                         capita disposable income




                                                           1985/86
                                                           1986/87
                                                           1987/88
                                                           1988/89




                            Per capita disposable income

         23
                                                           1989/90
                                                           1990/91
                                                           1991/92
                                                           1992/93
                                                           1993/94
                                                           1994/95
                                                                                                                                                         Per capita sheep consumption vs per




                                                           1995/96
                                                           1996/97
                                                           1997/98
                                                           1998/99
                                                           1999/00
                                                           2000/01
                            Per capita consumption


                                                           2001/02
                                                           2002/03
                                                           2003/04
                                                           2004/05
                                                           2005/06
                                                           2006/07
                                                           2007/08
                                                           2008/09
                                                                     0
                                                                                                                     6




                                                                             1
                                                                                     2
                                                                                             3
                                                                                                     4
                                                                                                             5
                                                                                                                            7
                                                                                                                                   8
                                                                                                                                          9
                                                                                                                                                 10




                                                                                                     Kg/year
 Imports: Beef 2009




Source: ITC, 2011     24
 Exports: Beef 2009




Source: ITC, 2011     25
 Imports: Live cattle 2009




Source: ITC, 2011            26
 Exports: Live cattle 2009




Source: ITC, 2011            27
   SA Beef vs calf prices: Long term




                           28
Source: BFAP, 2010
       Local beef price trends: Nominal
       3000
                       Good conditions: Rainfall
       2500
                       Low maize price
                       Low supply of weaners
                       HOWEVER
       2000
                       Winter on the way
c/kg




                       Supply A2A3 carcass will increase
       1500
                       Decreasing price
       1000


       500
                                Feb-02




                                                           Feb-03




                                                                                      Feb-04




                                                                                                                 Feb-05




                                                                                                                                            Feb-06




                                                                                                                                                                       Feb-07




                                                                                                                                                                                                  Feb-08




                                                                                                                                                                                                                             Feb-09




                                                                                                                                                                                                                                                        Feb-10




                                                                                                                                                                                                                                                                                    Feb-11
                       Oct-01




                                                  Oct-02




                                                                             Oct-03




                                                                                                        Oct-04




                                                                                                                                   Oct-05




                                                                                                                                                              Oct-06




                                                                                                                                                                                         Oct-07




                                                                                                                                                                                                                    Oct-08




                                                                                                                                                                                                                                               Oct-09




                                                                                                                                                                                                                                                                           Oct-10




                                                                                                                                                                                                                                                                                                      Oct-11
              Jun-01




                                         Jun-02




                                                                    Jun-03




                                                                                               Jun-04




                                                                                                                          Jun-05




                                                                                                                                                     Jun-06




                                                                                                                                                                                Jun-07




                                                                                                                                                                                                           Jun-08




                                                                                                                                                                                                                                      Jun-09




                                                                                                                                                                                                                                                                 Jun-10




                                                                                                                                                                                                                                                                                             Jun-11
                        Class A2/A3                                                   Class AB2/AB3                                                     Class B2/B3                                                 Class C2/C3                                                     Weaner

                                                  Feb-10                                                Feb-11                                                Sep-10                                       Sep 10 to Feb 11                                               Feb 10 to Feb 11
Class A2/A3                                        2337                                                  2686                                                  2276                                             18.0%                                                          14.9%
Class AB2/AB3                                      2178                                                  2594                                                  2174                                             19.3%                                                          19.1%
Class B2/B3                                        2130                                                  2445                                                  2117                                             15.5%                                                          14.8%
Class C2/C3                                        1987                                                  2287                                                  1953                                             17.1%                                                          15.1%
Weaner                                             1547                                                  1771                                                  1604                                             10.4%                                                          14.5%
Average                                                                                                                                                                                                         16.1%                                                          15.7%
Source: AMT, 2011
Local beef price trends: Real
(CPI:2008=100)
       3000


       2500


       2000
c/kg




       1500


       1000


       500
                       Oct-01




                                                  Oct-02




                                                                             Oct-03




                                                                                                        Oct-04




                                                                                                                                    Oct-05




                                                                                                                                                               Oct-06




                                                                                                                                                                                          Oct-07




                                                                                                                                                                                                                      Oct-08




                                                                                                                                                                                                                                                 Oct-09




                                                                                                                                                                                                                                                                            Oct-10




                                                                                                                                                                                                                                                                                                       Oct-11
              Jun-01




                                         Jun-02




                                                                    Jun-03




                                                                                               Jun-04




                                                                                                                           Jun-05




                                                                                                                                                      Jun-06




                                                                                                                                                                                 Jun-07




                                                                                                                                                                                                             Jun-08




                                                                                                                                                                                                                                        Jun-09




                                                                                                                                                                                                                                                                   Jun-10




                                                                                                                                                                                                                                                                                              Jun-11
                                Feb-02




                                                           Feb-03




                                                                                      Feb-04




                                                                                                                  Feb-05




                                                                                                                                             Feb-06




                                                                                                                                                                        Feb-07




                                                                                                                                                                                                    Feb-08




                                                                                                                                                                                                                               Feb-09




                                                                                                                                                                                                                                                          Feb-10




                                                                                                                                                                                                                                                                                     Feb-11
                                                                                                                      Class A2/A3                                                    Weaner

                                                               Feb-10                                            Feb-11                                 Sep-10                                     Sep 10 to Feb 11                                                Feb 10 to Feb 11
Class A2/A3                                                     2121                                              2356                                   2025                                           16.4%                                                           11.1%
Class AB2/AB3                                                   1976                                              2275                                   1935                                           17.6%                                                           15.1%
Class B2/B3                                                     1933                                              2145                                   1883                                           13.9%                                                           11.0%
Class C2/C3                                                     1803                                              2006                                   1738                                           15.5%                                                           11.3%
Weaner                                                          1404                                              1554                                   1427                                            8.9%                                                           10.7%
Average                                                                                                                                                                                                 14.4%                                                           11.8%
Source: AMT, 2011
                                                                                                       Oct-11
                                                                                                       Jun-11
                                                                                                       Feb-11
                                                                                                       Oct-10
                                                                                                       Jun-10
                                                                                                       Feb-10
                                                                                                       Oct-09
                                                                                                                Average Ratio




                                                                                                       Jun-09
Weaner:A2/A3 beef carcass price ratio




                                                                                                       Feb-09
                                                                                                       Oct-08
                                                                                                       Jun-08
                                                                                                       Feb-08
                                                                                                       Oct-07
                                                                                                       Jun-07
                                                                                                       Feb-07
                                                                                                       Oct-06
                                                                                                       Jun-06




                                                                                                                                           31
                                                                                                       Feb-06




                                                                                                                Weaner:A2/A3 price ratio
                                                                                                       Oct-05
                                                                                                       Jun-05
                                                                                                       Feb-05
                                                                                                       Oct-04
                                                                                                       Jun-04
                                                                                                       Feb-04
                                                                                                       Oct-03
                                                                                                       Jun-03
                                                                                                       Feb-03
                                                                                                       Oct-02




                                                                                                                                            Source: AMT & GrainSA, 2011
                                                                                                       Jun-02
                                                                                                       Feb-02
                                                                                                       Oct-01
                                                                                                       Jun-01

                                        0.80

                                               0.75

                                                      0.70

                                                             0.65

                                                                    0.60

                                                                           0.55

                                                                                  0.50

                                                                                         0.45

                                                                                                0.40
                                                         C/kg                                                                                c/kg




                                                                                                                                             2300




                                                                                                                      1700
                                                                                                                              1900
                                                                                                                                      2100
                                                                                                                                                     2500
                                                                                                                                                            2700
                                                                                                                                                                           2900




                           1600
                                                          1900




                    1500
                                    1700
                                                  1800
                                                                 2000
                                                                         2100
                                                                                       2200
                                                                                                2300
          Week 20                                                                                           Week 20
          Week 24                                                                                           Week 24
          Week 28                                                                                           Week 28
          Week 34                                                                                           Week 34
          Week 38                                                                                           Week 38
          Week 42                                                                                           Week 42
          Week 46                                                                                           Week 46




                                                                         C2/C3
                                                                                                                                                                   A2/A3
          Week 50                                                                                           Week 50




                                                                                                       FS




     FS
           Week 5                                                                                            Week 5
           Week 9                                                                                            Week 9
          Week 13                                                                                           Week 13
          Week 17                                                                                           Week 17




                                                                                                       NW




     NW
          Week 22                                                                                           Week 22
          Week 26                                                                                           Week 26
          Week 30                                                                                           Week 30




                                                                                                       NC




     NC
          Week 34                                                                                           Week 34
          Week 38                                                                                           Week 38
          Week 42                                                                                           Week 42




                                                                                                       LP
                                                                                                            Week 46




     LP
          Week 46
          Week 50                                                                                           Week 50
           Week 4                                                                                            Week 4
           Week 8                                                                                            Week 8
          Week 12                                                                                           Week 12
          Week 16                                                                                           Week 16
          Week 20                                                                                           Week 20
          Week 24                                                                                           Week 24
          Week 28                                                                                           Week 28
          Week 32                                                                                           Week 32




32
                                                         C/kg                                                                                c/kg
                                                                                                                                                                                  Provincial price variation


                                                                                                                                              2100




                                                                                                                       1500
                                                                                                                               1700
                                                                                                                                      1900
                                                                                                                                                     2300
                                                                                                                                                            2500
                                                                                                                                                                           2700




                                                         1300




                    1000
                             1100
                                           1200
                                                                  1400
                                                                                1500
                                                                                              1600




          Week 20                                                                                           Week 20
          Week 24                                                                                           Week 24
          Week 28                                                                                           Week 28
          Week 34                                                                                           Week 34
          Week 38                                                                                           Week 38
          Week 42                                                                                           Week 42
                                                                                                                                                                   B2/B3




          Week 46                                                                                           Week 46
          Week 50                                                                                           Week 50
                                                                                                       FS




     FS
           Week 5                                                                                            Week 5
                                                                                  Weaner




           Week 9                                                                                            Week 9
          Week 13                                                                                           Week 13
          Week 17                                                                                           Week 17
                                                                                                       NW




     NW




          Week 22                                                                                           Week 22
          Week 26                                                                                           Week 26
          Week 30                                                                                           Week 30
                                                                                                       NC




     NC




          Week 34                                                                                           Week 34
          Week 38                                                                                           Week 38
          Week 42                                                                                           Week 42
                                                                                                       LP




                                                                                                            Week 46
     LP




          Week 46
          Week 50                                                                                           Week 50
           Week 4                                                                                            Week 4
           Week 8                                                                                            Week 8
          Week 12                                                                                           Week 12
          Week 16                                                                                           Week 16
          Week 20                                                                                           Week 20
          Week 24                                                                                           Week 24
          Week 28                                                                                           Week 28
          Week 32                                                                                           Week 32
 Local price trends: Lamb/mutton: Nominal

        5500

        5000

        4500

        4000

        3500
 c/kg




        3000

        2500

        2000

        1500

        1000

         500
                        Oct-01




                                                   Oct-02




                                                                              Oct-03




                                                                                                         Oct-04




                                                                                                                                    Oct-05




                                                                                                                                                               Oct-06




                                                                                                                                                                                          Oct-07




                                                                                                                                                                                                                     Oct-08




                                                                                                                                                                                                                                                Oct-09




                                                                                                                                                                                                                                                                            Oct-10




                                                                                                                                                                                                                                                                                                       Oct-11
               Jun-01




                                          Jun-02




                                                                     Jun-03




                                                                                                Jun-04




                                                                                                                           Jun-05




                                                                                                                                                      Jun-06




                                                                                                                                                                                 Jun-07




                                                                                                                                                                                                            Jun-08




                                                                                                                                                                                                                                       Jun-09




                                                                                                                                                                                                                                                                  Jun-10




                                                                                                                                                                                                                                                                                              Jun-11
                                 Feb-02




                                                            Feb-03




                                                                                       Feb-04




                                                                                                                  Feb-05




                                                                                                                                             Feb-06




                                                                                                                                                                        Feb-07




                                                                                                                                                                                                   Feb-08




                                                                                                                                                                                                                              Feb-09




                                                                                                                                                                                                                                                         Feb-10




                                                                                                                                                                                                                                                                                     Feb-11
                                                              Class A2/A3                                           Class AB2/AB3                                                  Class B2/B3                                           Class C2/C3



                                                   Feb-10                                                Feb-11                                                Sep-10                                       Sep 10 to Feb 11                                               Feb 10 to Feb 11
Class A2/A3                                         3710                                                  4647                                                  4204                                             10.5%                                                          25.3%
Class AB2/AB3                                       3201                                                  4150                                                  3600                                             15.3%                                                          29.6%
Class B2/B3                                         3217                                                  3917                                                  3567                                              9.8%                                                          21.8%
Class C2/C3                                         2716                                                  3621                                                  3199                                             13.2%                                                          33.3%
Average                                                                                                                                                                                                          12.2%                                                          27.5%
 Source: AMT, 2011
Local price trends: Lamb/mutton: Real
(CPI:2008=100)
        4900

        4400

        3900

        3400
 c/kg




        2900

        2400

        1900

        1400

         900
                        Oct-01




                                                   Oct-02




                                                                              Oct-03




                                                                                                         Oct-04




                                                                                                                                     Oct-05




                                                                                                                                                                Oct-06




                                                                                                                                                                                            Oct-07




                                                                                                                                                                                                                        Oct-08




                                                                                                                                                                                                                                                   Oct-09




                                                                                                                                                                                                                                                                              Oct-10




                                                                                                                                                                                                                                                                                                         Oct-11
               Jun-01




                                          Jun-02




                                                                     Jun-03




                                                                                                Jun-04




                                                                                                                            Jun-05




                                                                                                                                                       Jun-06




                                                                                                                                                                                   Jun-07




                                                                                                                                                                                                               Jun-08




                                                                                                                                                                                                                                          Jun-09




                                                                                                                                                                                                                                                                     Jun-10




                                                                                                                                                                                                                                                                                                Jun-11
                                 Feb-02




                                                            Feb-03




                                                                                       Feb-04




                                                                                                                   Feb-05




                                                                                                                                              Feb-06




                                                                                                                                                                         Feb-07




                                                                                                                                                                                                      Feb-08




                                                                                                                                                                                                                                 Feb-09




                                                                                                                                                                                                                                                            Feb-10




                                                                                                                                                                                                                                                                                       Feb-11
                                                                                                                            Class A2/A3                                           Class C2/C3


                                                                Feb-10                                            Feb-11                                 Sep-10                                      Sep 10 to Feb 11                                                Feb 10 to Feb 11
Class A2/A3                                                      3367                                              4076                                   3740                                             9.0%                                                           21.1%
Class AB2/AB3                                                    2905                                              3640                                   3203                                            13.7%                                                           10.3%
Class B2/B3                                                      2919                                              3436                                   3173                                             8.3%                                                            8.7%
Class C2/C3                                                      2465                                              3176                                   2846                                            11.6%                                                           15.5%
Average                                                                                                                                                                                                   10.6%                                                           13.9%
Source: AMT, 2011
Feedlot prospects & scenario’s




                        35
   Feedlot margins

 Item                                            2007      2008      2009      2010      2011
 Purchase weight                                  240       240       240       240       240
 AGD (kg/day)                                     1.6       1.6       1.6       1.6       1.6
 Days on feed                                     128       128       128       128       128
 Dressing percentage                              58        58         58       58         58
 Carcass weight                                   445       445       445       445       445
 Weaner price (Oct)                            R 15.31    R 12.98   R 12.64   R 14.87   R 15.86
 A2/A3 meat price (Jan-Feb)                    R 18.14    R 22.52   R 24.70   R 23.43   R 26.45
 Weaner:A2/A2 price ratio                        0.84      0.58      0.51      0.63      0.60
 Yellow maize price (Okt-Jan)                  R 1,267    R 1,932   R 1,741   R 1,451   R 1,420
 Feed margin                                    R 197     R -140     R 373     R 587     R 979
 Price margin                                  R -1,149    R 20      R 405    R -307    R -125
 Total margin (profit/head)                     R -953    R -121     R 778     R 279     R 855




                                                          36
Source: Calculations based on: AMT & GrainSA, 2011
                                                                             R/USD




                                                  5
                                                        6
                                                               7
                                                                         8
                                                                                    9
                                                                                               10
                                                                                                       11
                                                                                                               12
                                                                                                                      13
                                         Jun-01
                                         Oct-01




Source: GrainSA, 2011
                                         Feb-02
                                         Jun-02
                                         Oct-02
                                         Feb-03
                                         Jun-03
                                         Oct-03
                                         Feb-04
                                         Jun-04
                                         Oct-04
                                                                                                                             Maize price trends




                                         Feb-05
                                         Jun-05




                         Exchange tare
                                         Oct-05
                                         Feb-06
                                         Jun-06
                                         Oct-06




                    37
                                         Feb-07
                                         Jun-07
                                         Oct-07




                         Yellow maize
                                         Feb-08
                                         Jun-08
                                         Oct-08
                                         Feb-09
                                         Jun-09
                                         Oct-09
                                         Feb-10
                         White maize



                                         Jun-10
                                         Oct-10
                                         Feb-11
                                         Jun-11
                                         Oct-11
                                                  500
                                                        700
                                                              900
                                                                      1100
                                                                             1300
                                                                                        1500
                                                                                                1700
                                                                                                        1900
                                                                                                               2100
                                                                                                                      2300




                                                                    Maize R/ton
Feedlot prospects: Weaner & beef price
changes

                         Mar 06 to Jul 06 Mar 07 to Jul 07 Mar 8 to Jul 8 Mar 09 to Jul 09 Mar 10 to Jul 10
 Class A2/A3                     2.6%          0.3%            -4.2%          -12.8%            -3.9%
 Class AB2/AB3                  -0.9%          -0.1%           -3.3%          -11.3%            -1.5%
                                                            Net negative effect
 Class B2/B3                     1.7%          9.0%            4.6%
                                                            6.3%            -7.7%               0.1%
 Class C2/C3                     6.7%          11.5%           8.1%            1.8%             1.3%
 Weaner                          4.3%          9.8%            -4.6%           -3.7%            2.4%
 Average                         2.9%          6.1%            0.1%            -6.7%            -0.3%




                                                       38
Source: Calculations based on: AMT, 2011
 Feedlot scenario’s (economic vs
 management factors)
 Item                                         2011 Base Scenario 1 Scenario 2 Scenario 3   Scenario 4*
 Purchase weight                                 240       240        200        200           240
 AGD (kg/day)                                    1.6       1.8        1.6        1.8           1.6
 Days on feed                                    128       114        125        111           128
 Dressing percentage                              58        58         58         58            58
 Live weight at slaughter                        445       445        400        400           445
 Carcass weight                                  258       258        232        232           258
 Weaner price (Oct)                            R 15.86   R 15.86    R 15.86    R 15.86       R 17.71
 A2/A3 meat price (Jan-Feb)                    R 26.45   R 26.45    R 26.45    R 26.45       R 26.85
 Yellow maize price (Okt-Jan)                  R 1,420   R 1,420    R 1,420    R 1,420       R 1,641
 Feed margin                                    R 979    R 1,206    R 1,199    R 1,395        R 722
 Price margin                                   R -125    R -125     R -104     R -104       R -513
 Total margin (profit/head)                     R 855    R 1,082    R 1,095    R 1,291        R 209
 Change in profit from base (%)                             27         28         51           -81
  *Weaner price – Feb 2011
  A2/A3 price – May-June 2011
                                                                               Calve: Carcass price
  Yellow maize Feb- May 2011
                                                                               ratio of 0.66
Source: Calculations based on: AMT & GrainSA, 2011 and own estimations
  Cattle marketing in the FS

                    Primary production                           Processing/wholesale & retail

          Agents
          •Adult female (14%)
          •Young females (33%)
          •Bulls (5%)
          •Castrated males (24%)                                70%
          •Calves (14%)




       Auction system               Feedlot
       •Adult female (11%)          •Adult female (7%)                                 Wholesale/deboning
       •Bulls (5%)                  •Young females (33%)
       •Castrated males (6%)        •Bulls (5%)                                                                      Retailer
       •Calves (7%)                 •Castrated males (18%)
                                    •Calves (49%)
                                                             Abattoir                       Butchery
                                                             •Adult female (51%)            •Adult female (6%)
                                                             •Bulls (35%)                   •Bulls (5%)
                                                             •Castrated males (41%)         •Castrated males (12%)
                               Commercial farms              •Calves (21%)                  •Calves (2%)
                               •Adult female (10%)
                               •Young females (33%)
                               •Bulls (45%)
                               •Calves (7%)


       Producers




Source: Spies, Jooste & Taljaard, 2011
  Lamb marketing in the FS

                  Primary production                          Processing/wholesale & retail

        Agents
        •Adult female (10%)
        •Young females (17%)
        •Breeding rams (6%)
        •Castrated males (27%)
                                                            46%
        •Lambs (8%)




     Auction system               Feedlot
     •Adult female (9%)           •Adult female (9%)                                 Wholesale/deboning
     •Breeding rams (11%)         •Young females (17%)
     •Lambs (2%)                  •Breeding rams(11%)                                                            Retailer
                                  •Castrated males (6%)
                                  •Lambs (36%)            Abattoir                       Butchery
                                                          •Adult female (40%)            •Adult female (9%)
                                                          •Young females (50%)           •Castrated males (9%)
                                                          •Breeding rams (28%)           •Lambs(5%)
                             Commercial farms             •Castrated males (45%)
                             •Adult female (9%)           •Lambs(41%)
                             •Breeding rams (44%)
                             •Lambs(2%)



     Producers




Source: Spies, Jooste & Taljaard, 2011
Challenges

Big responsibility for food industry: Feed the world & offer more from less


         6.8 billion – in the last 50 years the population has more than doubled

                                   9 billion – forecast global population in 2045


                                                    100% – growth in global demand for
                                                    meat by 2050


                                                      100% – growth in meat
                                                        consumption in China
                                                      in the past 15 years




                                          Pagina
                                            42         Source: Korver 2010
Challenges….

Changing demand and priorities
Switch from productivity focused model to food safety & sustainable business
model
                                Environment


          Animal welfare
                                                     Quality

                                                         Now

                                                          Future


                                                     Sustainability
             Productivity


                                 Production

  Source: Korver 2010
                                        43
  Challenges…
  • Information availability
        – Product flow, Financial flow,
          Information flow at every level of
          the value chain
               • Producers                                    Production practices
                     – Commercial                             Input use
                            » 60 – 70 % non-official          Animal health issues
                            » 20 – 30 % official              Markets (physical)
                     – Developing                             Prices
                            » 80 % no source of information   Product standards
                            » 10 % official                   Traceability
                            » 10 % non official
                                                              Risk management
               • Processors
                     – 100% non-official
               • Retailers
                     – 100% non-official




Source: Spies, Jooste & Taljaard, 2011
  Challenges…

  • Stimulate local demand
  • Educate consumers
        – Quality
               • Guaranteed safety
               • Palatability/eating experience
                     – Experiencing the same eating quality when purchasing a piece of red meat
                       periodically from the same place with the same preparation method.
               • Nutritional information, preparation methods/packaging
  • Increase local supply
        – Productivity of the emerging and developing producers
               • Commercial producers                                       International beef off-take
                   – Calving percentage (80%) and off-take rate (33%)       rates
                   – Lambing percentage (93%) (and off-take rate (35%)
               • Developing producers in the FS                             AUS                     28%
                                                                            NZ                      37%
                   – Calving percentage (30%) and off-take rate (12%)       EU                      34%
                   – Lambing percentage (13%) and off-take rate (2.3%)      US                      38%
                                                                            ARG, BRA, UR, PAR       20%

                                                                            Scholtz & Bester, 2008)
Source: Spies, Jooste & Taljaard, 2011              45
                         Dankie
                        Thank you


David Spies
David.Spies@nwu.ac.za
018 299 2373

				
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