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
'000 tons
Argentina
8,000
Brazil
China
6,000
EU
India
4,000
South Af rica
USA
2,000
SA 685
Source: FAPRI, 2010
4
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
0
Beef and veal: Production
SSA
LDC
Africa
South Africa
Developing
Asia and pacific
Latin America and Caribbean
World
Oceania developed
North Africa
North America
Developed
Europe
2010-2019
2000-2009
-2
-1
0
1
2
3
4
5
Average annual growth rate/ least squire (%)
Source: OECD FAO, 2010
5
6
Beef and veal: Consumption
14000
12000
10000
'000 ton
Australia
Argentina
8000
Brazil
China
6000
EU
India
4000
South Af rica
USA
2000
SA 836
Source: FAPRI, 2010
6
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
0
Beef and veal: Consumption
SSA
Africa
LDC
North Africa
Oceania developed
Asia and pacific
Developing
South Africa
Latin America and Caribbean
World
Developed
North America
Europe
2010-2019
2000-2009
-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
Kg/capita
50
Argentina
Brazil
40
China
EU
30
India
SA 17.23
20
South Af rica
USA
10
Source: FAPRI, 2010
9
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
0
Beef and veal: Per capita consumption
Oceania developed
South Africa
SSA
Africa
North Africa
Asia and pacific
LDC
Developing
Europe
Developed
Latin America and Caribbean
World
North America
2010-2019
2000-2009
-2
-1
0
1
2
3
Average annual growth rate/ least squire (%)
Source: OECD FAO, 2010
10
4
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
North America
Developed
Oceania developed
South Africa
LDC
2010-2019
2000-2009
-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
Oceania developed
North Africa
Europe
Africa
SSA
2010-2019
2000-2009
-20
-15
-10
-5
0
5
10
15
Average annual growth rate/ least squire (%)
Source: OECD FAO, 2010
14
1/1990
7/1990
1/1991
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
1/2000
7/2000
1/2001
7/2001
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
International meat price index
180
170
160
150
140
130
120
110
100
90
80
Meat Price Index
Source: FAO, 2011
15
Source: FAO, 2011
16
2010-01
2009-03
2008-05
2007-07
2006-09
2005-11
2005-01
2004-03
2003-05
2002-07
2001-09
2000-11
2000-01
1999-03
1998-05
1997-07
1996-09
1995-11
1995-01
1994-03
1993-05
1992-07
1991-09
1990-11
1990-01
International meat price indexes
250
200
150
Poultry Meat
Pig Meat
100
Bovine Meat
Ovine Meat
50
0
International beef prices
7,000
6,000
USD/Ton
5,000
4,000
3,000
2,000
1,000
0
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
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)
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. :
17
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
2000
FAPRI, 2010
Beef
21%
Chicken 27%
Thousand tons
1750
59%
1500
1250
1000
4%
750
500
24%
250
23%
0
Beef
Chicken
Sheep meat
Average consumption: 2007-2009
Source: OECD FAO, 2010
21
Consumption: 2019
Pork
1970/71
1971/72
1972/73
1973/74
1974/75
1975/76
1976/77
1977/78
1978/79
1979/80
1980/81
1981/82
1982/83
1983/84
1984/85
1985/86
1986/87
1987/88
1988/89
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
Rand
24000
26
23000
24
22000
21000
20000
18
19000
18000
16
17000
14
16000
15-16 kg/year
15000
Per capita disposable income
Source: SARB & DAFF, 2010
22
Per capita consumption
12
10
Kg/year
Per capita beef consumption vs per capita
disposable income
22
20
1970/71
1971/72
1972/73
1973/74
1974/75
1975/76
1976/77
1977/78
1978/79
1979/80
1980/81
1981/82
1982/83
1983/84
1984/85
1985/86
1986/87
1987/88
1988/89
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
Rand
24000
10
23000
9
22000
8
21000
20000
6
5
19000
4
18000
3
17000
2
16000
1
15000
0
Per capita disposable income
Source: SARB & DAFF, 2010
23
Per capita consumption
Kg/year
Per capita sheep consumption vs per
capita disposable income
7
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
Source: BFAP, 2010
28
Local beef price trends: Nominal
3000
Good conditions: Rainfall
Low maize price
Low supply of weaners
HOWEVER
Winter on the way
Supply A2A3 carcass will increase
Decreasing price
2500
c/kg
2000
1500
1000
500
Oct-11
Jun-11
Feb-11
Sep 10 to Feb 11
18.0%
19.3%
15.5%
17.1%
10.4%
16.1%
Oct-10
Class C2/C3
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Sep-10
2276
2174
2117
1953
1604
Jun-08
Class B2/B3
Feb-08
Oct-07
Jun-07
Feb-07
Oct-06
Jun-06
Feb-11
2686
2594
2445
2287
1771
Feb-06
Class AB2/AB3
Oct-05
Jun-05
Feb-05
Oct-04
Jun-04
Source: AMT, 2011
Feb-10
2337
2178
2130
1987
1547
Feb-04
Class A2/A3
Class AB2/AB3
Class B2/B3
Class C2/C3
Weaner
Average
Oct-03
Jun-03
Feb-03
Oct-02
Jun-02
Feb-02
Oct-01
Jun-01
Class A2/A3
Weaner
Feb 10 to Feb 11
14.9%
19.1%
14.8%
15.1%
14.5%
15.7%
Local beef price trends: Real
(CPI:2008=100)
3000
2500
c/kg
2000
1500
1000
500
Oct-11
Jun-11
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Jun-08
Sep-10
2025
1935
1883
1738
1427
Feb-08
Source: AMT, 2011
Feb-11
2356
2275
2145
2006
1554
Oct-07
Class A2/A3
Class AB2/AB3
Class B2/B3
Class C2/C3
Weaner
Average
Feb-10
2121
1976
1933
1803
1404
Jun-07
Feb-07
Oct-06
Jun-06
Feb-06
Oct-05
Jun-05
Feb-05
Oct-04
Jun-04
Feb-04
Oct-03
Jun-03
Feb-03
Oct-02
Jun-02
Feb-02
Oct-01
Jun-01
Class A2/A3
Weaner
Sep 10 to Feb 11
16.4%
17.6%
13.9%
15.5%
8.9%
14.4%
Feb 10 to Feb 11
11.1%
15.1%
11.0%
11.3%
10.7%
11.8%
Weaner:A2/A3 beef carcass price ratio
0.80
0.75
0.70
0.65
0.60
0.55
0.50
0.45
0.40
Oct-11
Jun-11
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Jun-08
Feb-08
Oct-07
Jun-07
Feb-07
Oct-06
Jun-06
Feb-06
Oct-05
Jun-05
Feb-05
Oct-04
Jun-04
Feb-04
Oct-03
Jun-03
Feb-03
Oct-02
Jun-02
Feb-02
Oct-01
Jun-01
31
Source: AMT & GrainSA, 2011
Average Ratio
Weaner:A2/A3 price ratio
FS
FS
NW
NW
NC
NC
Week 20
Week 24
Week 28
Week 34
Week 38
Week 42
Week 46
Week 50
Week 5
Week 9
Week 13
Week 17
Week 22
Week 26
Week 30
Week 34
Week 38
Week 42
Week 46
Week 50
Week 4
Week 8
Week 12
Week 16
Week 20
Week 24
Week 28
Week 32
2100
1900
C/kg
2200
Week 20
Week 24
Week 28
Week 34
Week 38
Week 42
Week 46
Week 50
Week 5
Week 9
Week 13
Week 17
Week 22
Week 26
Week 30
Week 34
Week 38
Week 42
Week 46
Week 50
Week 4
Week 8
Week 12
Week 16
Week 20
Week 24
Week 28
Week 32
C/kg
Week 20
Week 24
Week 28
Week 34
Week 38
Week 42
Week 46
Week 50
Week 5
Week 9
Week 13
Week 17
Week 22
Week 26
Week 30
Week 34
Week 38
Week 42
Week 46
Week 50
Week 4
Week 8
Week 12
Week 16
Week 20
Week 24
Week 28
Week 32
Week 20
Week 24
Week 28
Week 34
Week 38
Week 42
Week 46
Week 50
Week 5
Week 9
Week 13
Week 17
Week 22
Week 26
Week 30
Week 34
Week 38
Week 42
Week 46
Week 50
Week 4
Week 8
Week 12
Week 16
Week 20
Week 24
Week 28
Week 32
c/kg
2300
c/kg
Provincial price variation
2900
2700
A2/A3
2700
2500
2500
2300
2100
1900
1900
1700
1700
1500
LP
2300
C2/C3
1500
2000
1600
1500
LP
32
B2/B3
2100
FS
FS
NW
NW
NC
NC
LP
1600
Weaner
1400
1300
1800
1700
1200
1100
1000
LP
Local price trends: Lamb/mutton: Nominal
5500
5000
4500
4000
c/kg
3500
3000
2500
2000
1500
1000
500
Oct-11
Jun-11
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Sep-10
4204
3600
3567
3199
Feb-09
Class B2/B3
Oct-08
Jun-08
Feb-11
4647
4150
3917
3621
Feb-08
Class AB2/AB3
Oct-07
Jun-07
Feb-07
Oct-06
Jun-06
Feb-06
Oct-05
Jun-05
Feb-05
Source: AMT, 2011
Feb-10
3710
3201
3217
2716
Oct-04
Class A2/A3
Class AB2/AB3
Class B2/B3
Class C2/C3
Average
Jun-04
Feb-04
Oct-03
Jun-03
Feb-03
Oct-02
Jun-02
Feb-02
Oct-01
Jun-01
Class A2/A3
Class C2/C3
Sep 10 to Feb 11
10.5%
15.3%
9.8%
13.2%
12.2%
Feb 10 to Feb 11
25.3%
29.6%
21.8%
33.3%
27.5%
Local price trends: Lamb/mutton: Real
(CPI:2008=100)
4900
4400
3900
c/kg
3400
2900
2400
1900
1400
900
Oct-11
Jun-11
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Jun-08
Feb-11
4076
3640
3436
3176
Feb-08
Source: AMT, 2011
Feb-10
3367
2905
2919
2465
Oct-07
Class A2/A3
Class AB2/AB3
Class B2/B3
Class C2/C3
Average
Jun-07
Feb-07
Oct-06
Jun-06
Feb-06
Oct-05
Jun-05
Feb-05
Oct-04
Jun-04
Feb-04
Oct-03
Jun-03
Feb-03
Oct-02
Jun-02
Feb-02
Oct-01
Jun-01
Class A2/A3
Class C2/C3
Sep-10
3740
3203
3173
2846
Sep 10 to Feb 11
9.0%
13.7%
8.3%
11.6%
10.6%
Feb 10 to Feb 11
21.1%
10.3%
8.7%
15.5%
13.9%
Feedlot prospects & scenario’s
35
Feedlot margins
Item
Purchase weight
AGD (kg/day)
Days on feed
Dressing percentage
Carcass weight
Weaner price (Oct)
A2/A3 meat price (Jan-Feb)
Weaner:A2/A2 price ratio
Yellow maize price (Okt-Jan)
Feed margin
Price margin
Total margin (profit/head)
2007
240
1.6
128
58
445
R 15.31
R 18.14
0.84
R 1,267
R 197
R -1,149
R -953
Source: Calculations based on: AMT & GrainSA, 2011
2008
240
1.6
128
58
445
R 12.98
R 22.52
0.58
R 1,932
R -140
R 20
R -121
36
2009
240
1.6
128
58
445
R 12.64
R 24.70
0.51
R 1,741
R 373
R 405
R 778
2010
240
1.6
128
58
445
R 14.87
R 23.43
0.63
R 1,451
R 587
R -307
R 279
2011
240
1.6
128
58
445
R 15.86
R 26.45
0.60
R 1,420
R 979
R -125
R 855
Jun-01
Oct-01
Feb-02
Jun-02
Oct-02
Feb-03
Jun-03
Oct-03
Feb-04
Jun-04
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
R/USD
13
2300
12
2100
11
10
9
1300
8
1100
7
900
6
700
5
500
Exchange tare
Source: GrainSA, 2011
Yellow maize
37
White maize
Maize R/ton
Maize price trends
1900
1700
1500
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%
Class B2/B3
1.7%
9.0%
Net negative effect
4.6%
-7.7%
6.3%
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%
Source: Calculations based on: AMT, 2011
38
Feedlot scenario’s (economic vs
management factors)
Item
Purchase weight
AGD (kg/day)
Days on feed
Dressing percentage
Live weight at slaughter
Carcass weight
Weaner price (Oct)
A2/A3 meat price (Jan-Feb)
Yellow maize price (Okt-Jan)
Feed margin
Price margin
Total margin (profit/head)
Change in profit from base (%)
2011 Base Scenario 1 Scenario 2 Scenario 3
240
240
200
200
1.6
1.8
1.6
1.8
128
114
125
111
58
58
58
58
445
445
400
400
258
258
232
232
R 15.86
R 15.86
R 15.86
R 15.86
R 26.45
R 26.45
R 26.45
R 26.45
R 1,420
R 1,420
R 1,420
R 1,420
R 979
R 1,206
R 1,199
R 1,395
R -125
R -125
R -104
R -104
R 855
R 1,082
R 1,095
R 1,291
27
28
51
*Weaner price – Feb 2011
A2/A3 price – May-June 2011
Yellow maize Feb- May 2011
Source: Calculations based on: AMT & GrainSA, 2011 and own estimations
Scenario 4*
240
1.6
128
58
445
258
R 17.71
R 26.85
R 1,641
R 722
R -513
R 209
-81
Calve: Carcass price
ratio of 0.66
Cattle marketing in the FS
Primary production
Agents
•Adult female (14%)
•Young females (33%)
•Bulls (5%)
•Castrated males (24%)
•Calves (14%)
Auction system
•Adult female (11%)
•Bulls (5%)
•Castrated males (6%)
•Calves (7%)
Processing/wholesale & retail
70%
Feedlot
•Adult female (7%)
•Young females (33%)
•Bulls (5%)
•Castrated males (18%)
•Calves (49%)
Commercial farms
•Adult female (10%)
•Young females (33%)
•Bulls (45%)
•Calves (7%)
Producers
Source: Spies, Jooste & Taljaard, 2011
Wholesale/deboning
Retailer
Abattoir
•Adult female (51%)
•Bulls (35%)
•Castrated males (41%)
•Calves (21%)
Butchery
•Adult female (6%)
•Bulls (5%)
•Castrated males (12%)
•Calves (2%)
Lamb marketing in the FS
Primary production
Agents
•Adult female (10%)
•Young females (17%)
•Breeding rams (6%)
•Castrated males (27%)
•Lambs (8%)
Auction system
•Adult female (9%)
•Breeding rams (11%)
•Lambs (2%)
Processing/wholesale & retail
46%
Feedlot
•Adult female (9%)
•Young females (17%)
•Breeding rams(11%)
•Castrated males (6%)
•Lambs (36%)
Commercial farms
•Adult female (9%)
•Breeding rams (44%)
•Lambs(2%)
Producers
Source: Spies, Jooste & Taljaard, 2011
Wholesale/deboning
Retailer
Abattoir
•Adult female (40%)
•Young females (50%)
•Breeding rams (28%)
•Castrated males (45%)
•Lambs(41%)
Butchery
•Adult female (9%)
•Castrated males (9%)
•Lambs(5%)
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
– Commercial
» 60 – 70 % non-official
» 20 – 30 % official
– Developing
» 80 % no source of information
» 10 % official
» 10 % non official
• Processors
– 100% non-official
• Retailers
– 100% non-official
Source: Spies, Jooste & Taljaard, 2011
Production practices
Input use
Animal health issues
Markets (physical)
Prices
Product standards
Traceability
Risk management
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
– Calving percentage (80%) and off-take rate (33%)
– Lambing percentage (93%) (and off-take rate (35%)
• Developing producers in the FS
– Calving percentage (30%) and off-take rate (12%)
– Lambing percentage (13%) and off-take rate (2.3%)
Source: Spies, Jooste & Taljaard, 2011
45
International beef off-take
rates
AUS
NZ
EU
US
ARG, BRA, UR, PAR
28%
37%
34%
38%
20%
Scholtz & Bester, 2008)
Dankie
Thank you
David Spies
David.Spies@nwu.ac.za
018 299 2373