Drought projected to lower red meat prices


JOHANNESBURG, (CAJ News) – THE persistent dry spells have come as a blessing in disguise for red meat lovers in South Africa.

This follows reports farmers are reducing their livestock as a result of deteriorating pastures and the current high feed-grain prices.

Consequently, the price of red meat at a retail level is expected to fall by 8 percent to 15 percent between December and January next year, as more animals are being slaughtered by farmers, leading to an oversupply of meat in the short-term.

On average, beef and sheep prices at farm level are already marginally down by 1 percent and 2 percent respectively, with further declines expected as grazing conditions deteriorate due to a lack of rain.

Paul Makube, Senior Agricultural Economist at First National Bank, said consumers who were already struggling to provide for basic needs caused by rising food and electricity costs, should thus expect temporary relief during the festive season.

He said the low price of meat would be further sustained in January next year due to a lower demand from cash-strapped consumers that would be cutting back on spending following the holidays and facing new expenditure on school requirements.

“Despite the temporary relief on meat prices, consumers should not be misled. The drought conditions affecting the agricultural industry will have negative consequences on food prices in the longer term,” he highlighted.

Makube cautions that meat prices were expected to significantly increase from March and April next year as farmers start re-building their herds.

“Herd-building takes time – this will inevitably lead to a shortage in supply in the long term, because of a limited number of animals entering the food supply chain.”

He said therefore, the increasing price of meat at farm level coupled with a contraction in meat supply would ultimately result in retailers passing on costs to the consumers.

In contrast, consumers that prefer pork and poultry can expect to pay more in December as prices are expected to trend slightly upwards due to the increased demand ahead of the festive season.

“As consumers prepare for the holiday season, they can at least look forward to enjoying a traditional braai with friends and family, without worrying too much about the cost,” said Makube.

South Africa and the rest of the region are experiencing dry spell that is projected to result in decreased yields.

CAJ News

Short URL: http://cajnewsafrica.com/?p=9675

Posted by on Nov 17 2015. Filed under Africa & World, Featured, Finance, National, Regional. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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