CURRENT ACTIVITIES IN

THE SOUTH AFRICAN

BEEF INDUSTRY

15 October 2014

GERHARD SCHUTTECEO : RED MEAT PRODUCERS’ ORGANISATION

SWOT ANALYSIS FOR THE SOUTH

AFRICAN BEEF INDUSTRY

• Weaknesses

• Threats

• Opportunities

• Strengths

• Conclusion

WEAKNESSES• Inadequate government support – veterinary

services and import policy

• Limited traceability / individual ID of

livestock and movement control

• Lack of training for farmers & workers

• Market access for emerging sector – limited

infrastructure in rural areas

• Shortage of availability of livestock statistics

• Lack of capacity to enforce legislation

• Porous international borders

WEAKNESSES (CONT.)

THREATS

THREATS (CONT.)

THREATS• Sustainable monitoring of controlled and notifiable animal

diseases (CA, TB, FMD, RVF, PPR) and diseases that impact

on trade

• Natural disasters – periodic droughts, floods

Veld fires / Burning

Manage the control of veld fires both for the purposes of protection of

people and their assets as well as for protecting our environmental

values such as grazing land and biodiversity

THREATS (CONT.)

30,6% Extreme risk31,3% High risk11,7% Medium risk26,4% Low risk

•Alien plant invasions

Invasive alien species affect water security, the ecological functioning of natural systems and

they also pose a threat to the productive use of land. They intensify the impact of veld fires and

floods, and increase soil erosion.

•Over regulation and legislation of the industry

(Agriculture is dictated by 88 Acts)

THREATS (CONT.)

Invader species (Slangbos / Seriphium plumosum)

Relationship between aboveground grass phytomass production loss (%) and Seriphiumplumosum density (shrubs ha− 1) (P < 0.01; n = 9). (Snyman, 2012)

• Unilateral trade arrangements of neighboring countries

• Global warming / Water footprint

• Risk factors posed by the game industry

• Lack of written bio-security plans on individual farming

level

THREATS (CONT.)

• Impact of mining and pollution on the red meat industry

• Rising input costs – feed, electricity, fuel, labour and land prices

THREATS (CONT.)

OPPORTUNITIES• Mobilizing and commercialization of the emergent sector

(formal and informal mentorships)

• Establishment of trade marks for differentiated markets

(red meat is naturally produced)

• Establishment of a “Grass Fed / Free Range” Association

• Production systems (feedlot / integration with game or cash

crops)

• New software and GPRS technologies

• Foot-and-Mouth disease free zone

• New export opportunities for red meat and

red meat products as well as genetic

material

OPPORTUNITIES (CONT.)

• Nutrient composition of South African Red Meat

• Nutrient composition of the 5th quarter

OPPORTUNITIES (CONT.)

Global and local decreases in fat content of meat observed over time

• New scientific findings on the positive

characteristics of red meat in a balanced

diet

• The demand for red meat grows in accordance with

economic and population growth (20 % for beef and

15 % for sheep meat until 2023)

OPPORTUNITIES (CONT.)

OPPORTUNITIES (CONT.)

• SA classification system to be tested in terms of consumer

needs and international norms

• Better animal welfare practices – Code of Best Practice

• Research must be expanded

• State extension actions must be restructured

• Producer organisations must be involved

• Consumer preferences in terms of antibiotics,

growth hormones and beta antagonists

• Disaster management strategy

• Feed bank management

• The role of red meat in food security in a country lacking in

proteins

• The role of the red meat industry in a National Development

Strategy

• Role of the 5th quarter in food security

• Genomics in terms of new developments

• Community year for veterinarians

• New export opportunities

• Stricter enforcement of the Consumer Protection Act,

Labelling Act and Agricultural Standards Act

• Use of residues, including bio fuel residues as animal feed

source

OPPORTUNITIES (CONT.)

STRENGHTS• Good organizational support of industry structures

(RPO, NERPO (Federation of Red Meat Producers of SA),

SA Feedlot Association, RVAV, SAPPO, MPO, NWKV,

SHALC, RMIF, RMRD-SA, Nat. and prov. Stock Theft

Forums, Nat. and Prov. PMF’s, LWCCRMRD-SA

Red Meat Research and

Development Trust

RPOSmall Stock / Cattle

SANCU

SA National Consumer

Union

AMIE

Associ

atio

n of M

eat

Import

and E

xport

SAFL

A

SA F

ederatio

n of

Live

stock

Age

nts

SAFA

SA Feedlot Association

SHA

LCSk

ins,

Hid

es

an

d

Lea

the

r C

ou

nci

l

NER

PO

Nat

ion

al E

mer

gen

t R

ed

Me

at P

rod

uce

rs

Org

aniz

atio

n

SAPPOSA Pork Producers Organization

RMIFRed Meat Industry Forum

Stock Theft

Prevention Forum

PMFPredation

Management ForumAHF

Animal Health Forum

• State support – legislation, veterinary services

• Strong private business within the value chain

• Red meat industry not dependent on state subsidies

STRENGHTS (CONT.)

• Statutory levy – address critical functions in the red meat

industry

• Good management practices within the total value chain

(Codes of Best Practice)

• 40 % of livestock belongs to developing and emerging

producers

• Household owning

sheep 215 034

• Household owning

goats 429 065

STRENGHTS (CONT.)

• Feedlots 56 units with ± 2 500 workers and 15 000 directly

affected dependents

• 27 000 primary commercial and emerging farmers

employing 122 000 workers with 750 000 directly affected

dependents

• 1 200 000 Communal and small scale farmers with

10 000 000 directly affected dependents

• 80 % of the natural resource only

suitable for livestock and

wildlife production and wildlife ranching

STRENGHTS (CONT.)

• South African industry is internationally competitive

STRENGHTS (CONT.)

Total cost and returns of typical cow-calf enterprises 2010 (USD per 100kg live weight)

• Nett importer of red meat and livestock

• Large gene pool from which genetic, adapted animals can be bred:

� Livestock genetic resources

� Cattle breeds: Indigenous – 9

(http://www.embryoplus.com/cattle_sa_indigenous.html)

� Other – 25 (BEEF BREEDING IN SOUTH AFRICA, 2nd Edition, 2010)

� Sheep breeds: Indigenous – 12 (Snyman & Herselmann, 2011)

� Other – 12 (S Afr J Anim Sci, 1999)

� Goat breeds: Indigenous – 4 (Cambell, 2003; ARC, http://www.arc.agric.za/home.asp?pid=2701)

� Large gene pool opportunity for adjustment to changing environment

STRENGHTS (CONT.)

• Stock improvement schemes

• Onderstepoort Biological Products (OBP) –

upgrading

• 40 % Ad valorum import tariff

• Good liaison with Departments

• Preference for fresh meat

STRENGHTS (CONT.)

• Red Meat Commercialization, Technology Transfer & Training

CONCLUSION

Off-take percentages of different species in

South Africa compared to

other countries

and regions(84).

Country and Region Beef / cattle

South Africa

(commercial)

23 [32(85) 33(86)]

South Africa (emerging(87)) 8* [25(85) 12(86)*]

South Africa (communal(85) ) 6

Australia 28

New Zealand 37

European Union 34

USA 38 [37(89)]

Brazil 22

Argentina(89) 26

Uruguay(89) 30

South America ** 20

• Consumer behavior

CONCLUSION

CONCLUSIONBEEF BALANCE SHEETS

2010 2011 2012 2013

BEEF

Cattle slaughter 2412289.0 2311378.0 2288921.0 2452856.0

Beef total production 1000 t 654.9 622.2 613.1 664.6

Beef imports meat 1000 t 23.9 24.0 63.0 61.6

Beef imports live 20.5 23.1

Beef total supply 1000 t 699.4 669.3 676.2 726.2

Beef consumption 1000 t 695.4 663.1 670.9 715.1

Beef exports 1000 t 4.0 6.2 5.3 11.1

Beef residual 1000 t 0.0 0.0 0.0 0.0

Beef domestic use 1000 t 695.4 663.1 670.9 715.1

Beef total demand 1000 t 699.4 669.3 676.2 726.2

Beef per capita consumption kg/capita 13.9 13.1 13.2 14.0

Beef avg abattoir price A2/A3 c/kg 2361.00 2835.00 2955.67 2900.87

Weaner avg auction price c/kg 1552.00 1916.00 1713.17 1611.45

CONCLUSION

EXPECTATIONS FOR THE BEEF

INDUSTRY IN SOUTH AFRICA FOR

2015

In terms of the year-on-year producer

prices –

• A2/3 beef carcasses increased by 18%

• Weaner prices increased by 29 %

• Meat Consumption

CONCLUSION

THANK YOU

Gerhard SchutteTel : 012 348 1933

Cell : 082 556 7296

E-mail : gerhard@rpo.co.za