challenges and opportunities in the south african … · beef total supply 1000 t 699.4 669.3 676.2...

1

CHALLENGES AND

OPPORTUNITIES IN THE

SOUTH AFRICAN BEEF

INDUSTRY

Gerhard Schutte

CEO: Red Meat Producers Organisation

21 May 2014

2

Index

• Introduction

• Focus Areas

– Sustainable natural resource utilization

– Competitiveness

– Animal Health

– Animal Welfare

– Animal Products, Quality and Value-adding

– Red Meat Safety, Nutritional Quality and Value

– Consumerism, Market Development and Trade

– Unlocking the Red Meat Potential through Commercialization, Technology

transfer and Training

– Stock theft Prevention

– Predation management

– Global warming

• Challenges

• Opportunities

• The future

3

Introduction

• 70% land suitable for livestock and wildlife ranging

• 40% of livestock owned by emerging & subsistence

farmers (DAFF, 2011)

• SA is nett-importer of beef, sheep meat, weaner calves

& live goats

4

BEEF 2010 2011 2012 2013**

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

** Source BFAP - Preliminary estimates for 2013

5

Introduction (cont.)

• International benchmarking studies indicate that the

commercial sector is competitive

Total cost and returns of typical cow-calf enterprises 2010

(USD per 100kg live weight)

6

90

100

110

120

130

140

150

160

170

180

190

200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pri

ce

in

dic

es

, c

on

sta

nt

pri

ce

sAll meat producer/wholesaler price indices, 2001-2013(f) (2001 L.C.)

Including China

SHEEPMEAT

BEEF & VEAL

PIGMEAT

ALL

POULTRY

Source: GIRA GMC 2012

Based on 2001 producer prices

Weighted (consumption) averages

7

Focus Area 1: Sustainable natural resource

utilisation

• The environment, i.e. land, water and climate, creates a

particular type of vegetation with its unique problems and

production potential for animal production

– Forage resources and management, including fodder flow

programs

– Veld monitoring and management

– Pastoral risk management and decision support systems

Droughts Veld fires Invader species

(eg slangbos)

8

Focus Area 1: Sustainable natural

resource utilisation (cont.)

Droughts / Rainfall

Aridity zones

Average annual rainfall

9


utilisation (cont.)

• 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

30,6% Extreme risk

31,3% High risk

11,7% Medium risk

26,4% Low risk

10


utilisation (cont.)

• 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

Relationship between aboveground grass phytomass production

loss (%) and Seriphiumplumosum density (shrubs ha− 1) (P < 0.01;

n = 9). (Snyman, 2012)

Invader species (Slangbos (Seriphium plumosum))

11


utilisation (cont.)

• 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)

• Large gene pool opportunity for adjustment to changing

environment

Nguni Bonsmara

12


utilisation (cont.)

• Environment protection

– Erosion prevention

– Reclaim eroded and polluted resource

– Water resources and quality

13

Focus Area 1: Sustainable natural

resource utilisation (cont.)

Mining / Land Reform / Fracking

14

Focus Area 2: Competitiveness

• Animal Recording and improvement

• Reproduction efficiency

• Genetic improvement / Genomics

– Resistance/ tolerance

– Selection criteria

• Nutrient intake and utilization

– Chemical composition of current and potential feedstuffs

including waste products and biofuel residues

• Nutrient requirements

15

Focus Area 2: Competitiveness (cont.)

• Production systems

– Feedlot and back grounding

– Game and livestock

– Integrated crop/animal production systems

• Infrastructure, equipment and practices for animal

production

– Software and GPRS technology

16

Focus Area 3: Animal Welfare

• The average city dwellers interaction with an animal is

with their pet - they expect farmers to deal with livestock

in the same way

• Codes of Best Practice

LIVESTOCK WELFARE COORDINATING COMMITTEE

17

Focus Area 4: Animal Health

Diseases that impact on trade

Source: RMAA Congress (OIE), 2011

Economic impact Foot-and-mouth disease

The current economic loss to the South African agricultural

industries due to the fact that we lost our Foot and Mouth Free

status is R4 billion per annum

18

Focus Area 4: Animal Health (cont.)

• Soonosis

– The BSE outbreak in the UK created a food scare and the

consumption dropped by almost 40% overnight

• Disease control strategies

– Biosecurity systems on farms

– Disease reports per region

• Livestock / game interactions

– 9 600 adequately fenced game farms

– 1 800 ha average

– Foot and Mouth Disease

– Corridor disease

– Brucellosis

– Malignant Catarrhal Fever

19

Focus Area 4: Animal Health (cont.)

• State

– OBP

Service Veterinarians Administrative

staff

Technical Staff Border & Control

Zone Staff

Filled

Posts

Vacant

Posts

Filled

Posts

Vacant

Posts

Filled

Posts

Vacant

Posts

Filled

Posts

Vacant

Posts

National 26 20 35 2 88 8 530 184

Provincial 187 104 226 54 1079 305 0 0

Total 213 124 261 56 1167 313 530 184

% 63% 37% 82% 18% 79% 21% 74% 26%

Current State component

20

Focus Area 5: Animal products, quality

and value adding

Product characteristics

Source: Prof Hettie Schönfeldt

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

21

Focus Area 5: Animal products, quality and

value adding (cont.)

* Offal

* Product technology and shelf life * Fresh vs. processed

* Classification system * Genetics and product development

Percentage animals with 0, 1 of 2

copies of the gene

Frequency of

gene for

meat

tenderness Breed 0 (%) * (%) ** (%)

Afrikaner 0 7 93 96%

Bonsmara 1 6 93 96%

Drakensberger 0 36 64 82%

Nguni 2 28 70 84%

Tuli 17 22 61 72%

Brahman 18 50 32 57%

Angus 1 21 78 89%

2 28 70 84%

Soure : Prof Frikkie Neser

22

Focus Area 6: Red meat safety, nutritional

quality and value

• Microbial pathogens

• Chemical residues

• Nutrient composition and bio-availability

• Health promoting properties of red meat

– Red meat and cancer

– Red meat and heart disease

– Red meat obesity and diabetes

– “Men love it - Women need it”

23

Focus Area 7: Market Development,

Consumerism and Trade

Value chain analysis

RMIF Red Meat Industry

Forum

± 70 000 Commercial and Emergent Red Meat Producers

RMRDT Red Meat Research and

Development Trust

SAMIC SA Meat IndustryCompany

MIT Meat Industry Trust

MSMS Meat Statutory Measure

Services

RMLA Red Meat Levy Admin

RP

O

Sm

all

Sto

ck / C

att

le

RM

AA

R

ed

Me

at

Ab

att

oir

Asso

cia

tio

n

SA

NC

U

SA

Na

tio

na

l

Con

su

me

r U

nio

n

AM

IE

Asso

cia

tio

n o

f M

ea

t

Imp

ort

an

d E

xp

ort

SA

FL

A

SA

Fe

de

ratio

n o

f

Liv

esto

ck A

ge

nts

SA

FA

S

A F

ee

dlo

t

Asso

cia

tio

n

SH

AL

C

Skin

s, H

ide

s a

nd

Le

ath

er

Cou

ncil

NE

RP

O

Natio

na

l E

me

rge

nt

Red

Me

at

Pro

du

ce

rs

Org

an

iza

tio

n

SA

PP

O

SA

Po

rk P

rod

uc

ers

Org

an

iza

tio

n

NF

MT

N

atio

na

l F

ed

era

tio

n

of M

ea

t T

rad

ers

GM

TE

U

Ga

ute

ng

Me

at

Tra

de

rs E

mp

loye

es

Unio

n

24


Consumerism and Trade (cont.)

• International Trade / Policy

25


Consumerism and Trade (cont.)

• Consumer behavior

– LSM Consumers 1 to 4



26

Red meat attributes valued by consumers (2014)

Marginalised consumers: LSM 1 to 4

Price (Sign more NB for mutton/lamb)

Appearance (general & colour)

Food safety / hygiene (cleanliness, exp date)

Sensory appeal (tenderness)

Quality guarantee (Sign more NB for beef)

Convenience

Value for money (amount of meat per pack,

bone to meat ratio) Source : Schönfeldt & Vermeulen, 2014

27


Emerging consumers: LSM 5 to 7

Food safety / hygiene (exp date, no blood)

Appearance (general, meat colour, clean meat)

Price (Sign more NB for beef steak & mutton/lamb chops)

Sensory appeal (Taste, flavour, tenderness, juiciness)

Quality guarantee

Convenience (easy prepare)

Purchase location

Source : Schönfeldt & Vermeulen, 2014

28


Established consumers: LSM 8 to 10

Food safety/hygiene (exp date, clean) (Sign more NB for beef

Quality guarantee

Appearance (general, meat colour, clean meat)

Sensory appeal (Taste, flavour, tenderness, juiciness)

Price (Sign more NB for mutton/lamb chops)

Purchase location

Convenience (Sign more NB for beef mince)

Source : Schönfeldt & Vermeulen, 2014

29

Focus Area 8: Unlocking the potential of red meat

commercialization, technology transfer and training

Country and

Region

Beef

cattle

Sheep Goats Pigs

South Africa

(commercial)

23 [32(85) 33(86)] 29 [35(86)] 33 125

South Africa (emerging(87)) 8* [25(85) 12(86)*] 36 [2.3(86)*] 10(88) 51

South Africa (communal(85) ) 6

Australia 28 28 37 186

New Zealand 37 68 79 204

European Union 34 65 72 164

USA 38 [37(89)] 50 - 17

Brazil 22

Argentina(89) 26

Uruguay(89) 30

South America ** 20 50 30 82

Off-take percentages of different species in South Africa compared to

other countries and regions(84).

30

Focus Area 8: Unlocking the potential of red meat

commercialization, technology transfer and training

(cont.)

• Technology transfer and Training / Extension

• Mentorships

31

Number of agricultural households owning

cattle by province

PROVINCE 1-10 11-100 +100 TOTAL

Western Cape 2 486 2 186 1 259 5 932

Eastern Cape 172 507 25 908 2 122 200 538

Northern Cape 6 355 3 513 977 10 846

Free State 21 952 6 354 2 283 30 590

KwaZulu-Natal 136 728 31 013 1 792 169 534

North West 35 545 13 755 2 397 51 699

Gauteng 4 518 2 923 789 8 231

Mpumalanga 33 087 10 565 1 074 44 727

Limpopo 69 089 21 713 759 91 562

SOUTH AFRICA 482 270 117 934 13 457 613 662

Source : Stats SA (Agricultural Households Report 03-11-01)

32

Focus Area 9: Predation Management

• Cost of predation

– R1400 000 000 per annum in the small stock sector

– Large Stock – R300 million

– Wildlife ?

33

Focus Area 9: Predation Management (cont.)

Jakkalsproef heinings

9%

Klokkies 4%

Slagysters 12%

Vanghokke 15%

Profesionele Nagjagter

16%

Selfjag 12%

Jaghonde 6%

Helikopter 8%

Skaapwagters 1%

Donkies 1%

Kraal 2%

Jakkals jaers 1%

Dead Stop Collars

1%

Kingcollars 1%

Anatool 1%

Source : Niël Viljoen

GIF

34

Focus Area 9: Predation Management

(cont.)

• Predation is increasing

• All strategies and actions require testing

• Develop strategies to address the problem

• Underpinned by sound, verifiable and testable science

by recognized R&D practitioners

• Urgent need for education and training

• Understanding of the problem

• Develop capacity to implement tactics

• Engage with government (DEA and DAFF)

35

Focus Area 10: Stock Theft

» Cattle ˃ Stolen 60600 R 454 500 000

˃ Recovered 26 458 R 198 435 000

˃ Loss 34 142 R 256 065 000

» Sheep ˃ Stolen 90017 R 108 020 400

˃ Recovered 18541 R 22 249 200

˃ Loss 71476 R 85 771 200

» Goats ˃ Stolen 35995 R 50 393 000

˃ Recovered 10078 R 14 109 200

˃ Loss 25 917 R 36 283 800

– CATTLE : R 7 500-00 per unit

– SHEEP : R 1 200-00 per unit

– GOATS : R 1 400-00 per unit

1 April 2010 – 31 March 2011

Cost of Stock Theft

36

Focus Area 10: Stock Theft (cont.)

• Animal ID / Branding / alternative methods of identification

37

Challenges

• How can we manage if we can’t measure

• How are we going to create a positive image of red meat

production / sustainability

• What about traceability in a country where we are a nett-

importer

• Is the South African classification system in line with the

South African consumers’ needs and international trends

• How do we go “Green”

38

Challenges (cont.)

• What will we do if South Africa becomes a Foot-and-

Mouth endemic country

• Industry Information vs. the Competition Commission

• 88 Acts in Agriculture vs. production

• Livestock vs. game ranching

• Global warming – we need a roadmark

• Southern African Customs Union (SACU) and Southern

African Development Communities (SADC)

• Can we afford unilateral trade decisions from

neighboring countries

39

Challenges (cont.)

• Doesn’t matter what the science tells us, consumers are

sceptical about antibiotics, hormones and Beta-agonists

• Consumers expect sustainability and welfare from

farmers

• Do we understand the informal/emerging sector

• Disaster Management Strategy

• Agricultural Research – we need to spent more

• Extention – we need a new system

40

Opportunities

• What about satellite technology to count livestock

• What role can the red meat industry play in food security and

providing for a protein deprived South Africa and Africa

• The role of the Beef industry in the National Development Plan

• Centres of excellence / scares skills

• Livestock has centre staged in South Africa (how are we going to

utilize this)

• The contribution of the fifth quarter to food security

• Animal Improvement Schemes an asset which we must treasure

• Onderstepoort Biological Products

• Genomics

• GPRS technologies

41

Conclusion

• The demand will grow by 25 % by the year 2020

• Producers should take informed decisions

• RPO contribute towards informed decisions

– Website

– Red Meat Magazine

– Monthly electronic news letter

– Communicator

42

Thank You

www.rpo.co.za

http://www.rpo.co.za/

challenges and opportunities in the south african … · beef total supply 1000 t 699.4 669.3 676.2...

Documents