Red meat industry drought scenarios

According to a Red Meat Producers (RPO) statement, the worst drought in 20 years has impacted severely on livestock numbers. 

The RPO is also very concerned about the animal welfare implications of the drought. Again in KZN, more than 40 000 cattle have died and serious livestock losses are being experienced in the emerging sector countrywide.

The drought follows a very poor 2014 season in most parts of the country. Limited planting has been possible in the summer rainfall areas and grain prices have already started to rise. At least six weeks of the growth of natural grazing has been lost and crop residues will be limited during the coming winter.

Farmers have already scaled down to nucleus herds and high costs are being incurred for feed and water supply. Even with normal rainfall figures, it will take commercial producers between three and four seasons to recover economically.

The RPO has put forward two scenarios:

Scenario 1
If the drought is soon broken and rainfall is normal for the rest of the season, the following is likely:

  • Supply of slaughter sheep will decline because of herd building.
  • Meat prices will increase in the medium and longer term, because farmers will build their herds after the drought. This will create a deficit on the supply side.
  • Supply of weaner calves will decline because of herd building.
  • Slaughtering of feedlot cattle will remain stable for the following few months because the standing capacity of the feedlot industry is at this stage the highest ever with 560 000 units.
  • The supply of C-grade beef (factory meat) will decline because of herd building, with the exception of milking cows, whose number will even decline further if the milk price rises substantially. 
  • Weaner calf prices will be inclined to rise, but the high maize price will dampen excessively higher jumps. Cattle and sheep prices will rise above the inflation rate.
  • Lambing and calving percentages will be lower because female animals are in a poor condition, which will also result in a lower supply.

Scenario 2
If the drought persists, the following will be likely:

  • More young female animals (substitute heifers) will, in the short term, end up in the feedlot and most likely be slaughtered, which can have an influence on calving percentages.
  • Further emergency slaughters will take place in the short term, but supply will not rise drastically because herds are already diminished.
  • Producer prices will be somewhat lower in the short term.
  • In the long term, supply will seriously be under pressure with prices rising above the inflation rate.
  • The consumer price of red meat will increase because of more expensive grain and feed prices and the impact of the lower supply of slaughter stock from farms. Grain and feed prices as well as input costs will drastically increase.