Rising grain prices, dwindling cattle stock create opportunities for SA beef

The high cost of grain is pricing many beef producing countries out of the market, leaving a gap for South Africa and the US to fill.

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The high cost of grain is pricing many beef producing countries out of the market, leaving a gap for South Africa and the US to fill. This is according to Lee Leachman, chief executive of the Leachman Cattle Company in the US, at the Stockmans School in Free State.

He explained that the price of feed has doubled because maize is now also used for the production of biofuel. “Most countries can’t afford to feed their cattle grain, because consumers can’t afford to pay the higher price of this meat. I believe that high grain prices will keep other countries out of the grain-fed beef market.”

Leachman added that although global fears that oil would run out were unfounded, the commodity would become increasingly expensive and since maize, beef and oil prices were linked, the cost of beef production would increase.

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“There will be fewer people enjoying steaks in 2020 because they will not be able to afford it. This is because of an increased demand for beef and a decreased supply. Grain will take land from beef production because of the high grain prices. Cattle production is down 6% over the last decade. Global cattle numbers have peaked forever and are on a downward trend.”

Leachman said that grazing land prices have more than tripled in the last decade and it is difficult to make a profit on beef. “This will change the way we look at a carcass and how it is cut up. Steaks will be cut in half to produce more beef from fewer cattle.

There will also be an expansion in the use of beta-agonists like Zilmax, to increase carcass lean yield.” He commented that the number of millionaires in China and India increases by 20% annually, resulting in a higher demand for beef. “High quality meats (grain-fed) will go to India and China because they have the buying power. Farmers who grow grain and beef will profit from this new market.”

Meanwhile, Hannes Haasbroek, general manager of B Hurwitz Farming near Ermelo, said that the high price of beef is as a result of a declining number of cattle farmers due to land claims and the poor economy. A shortage of breeding stock has also led to a decline in cattle numbers.

“Feedlots are struggling because the high maize prices have resulted in higher weaner prices, and consumers are becoming sensitive to high prices. Lamb prices have already declined because consumers were showing resistance. “Beef has also decreased in demand due to high prices, but it is only a matter of time before the consumer gets used to higher prices and demand will stabilise,” concluded Haasbroek. – Lindi van Rooyen