Meat prices expected to increase up to 15 per cent

Pic: freeimages.com.

It’s braai season and red meat prices are expected to increase by at least nine to 15 per cent, due to tight supply and increased demand from consumers during the festive season.

Paul Makube, a Senior Agricultural Economist at FNB, says red-meat slaughtering has been substantially higher this year compared to the past three years as a result of the drought. For example, the cumulative sheep slaughter number is currently 111 per cent and 69 per cent higher than the 2015 and 2014 levels respectively.

However, despite an increase in slaughtering, there has not been an oversupply of meat which would have resulted in lower prices, due to exports and a strong demand for South African meat in the tourism sector.

“In terms of the outlook for beef, we are heading into a seasonal price increase of between R3,4 and R5,7 per kilogram (kg) for Class A beef as braai season returns.

Consumers that prefer to braai lamb can expect to pay between R5,6 and R9,4 per kg more for Class A lamb over the festive period,” said Paul.

Pork will also benefit from the increased price of red meat. However, there won’t be much of a price movement in poultry due to increasing imports.

Despite continued pressure on disposable income, most consumers will still be able to absorb a slight increase in meat prices during the festive period, while others will opt to purchase red meat in bulk to outweigh the price increases.

“Even during tough economic conditions, we have picked up a trend where consumers will usually cut back on luxuries and non-essentials, but generally spend more on food and meat during the festive season.”

However, Paul cautioned that prices would have to return to normal levels in January, after the festive season, to avoid resistance from consumers.

He said that with rain expected in the coming months, the situation should start improving for livestock farmers who have suffered financial losses as a result of the drought. Forecasts are now projecting neutral conditions for the 2016/ 17 season, meaning that we should expect normal, instead of above normal, rainfall, as had been previously estimated.

According to Paul, this is good news as the sector will not have to worry about possible damage resulting from floods, torrential rains and heavy winds, often associated with the strong La Nina that was predicted earlier this year. The expected rainfall should be sufficient for herd-rebuilding to begin, further helping livestock farmers to reduce costs in the long-term.

“By mid-2017, we should see a moderation in grain prices which will lower animal feed costs, resulting in improved margins and profitability levels for farmers who are currently facing losses from the recent drought,” he concluded.

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  AUTHOR
Janine Viljoen
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