By Nico van Burick
Red meat producers are not yet making bags full of money, but thanks to good carcass and weaner calf prices in the past two months, farmers should almost break even again, says Dr Frikkie Maré, chairperson of the Red Meat Producers Organisation (RPO).
With the average A2 beef carcass price having remained around R54 per kilogram for a long time, it was a welcome relief for the meat industry when prices climbed to R67 per kilogram during April. This price was approximately 21% higher than the same time last year.
Although weaner calf prices didn’t rise as drastically, there was still an upturn, says Maré. Compared to last year’s prices, the weaner calf price is currently about 16% higher and prices of more than R37 per kilogram are being observed in the market.
He attributes the rise in prices to a carcass shortage that has come about for various reasons. Firstly, there was a shortage of animals to slaughter after more animals were slaughtered in 2024 than in the last six to seven years prior. A sudden rise in weaner calf prices during November and December last year already showed that there was a shortage of weaner calves.
“Those calves that were bought then had to be slaughtered now in March and April. So at that stage there just weren’t enough weaner calves in the market for the past two months’ slaughtering,” he says.
The exceptional rainfall and associated cooler weather in recent months have further contributed to the carcass shortage. “When it’s so cold, animals in a feedlot don’t perform as desired. Cattle often had to stay in the feedlot for longer before they were ready for slaughter.”
A third factor can also be attributed to the rainy weather. Maré says there were very few C-grade carcasses (old cows) in the market. “It was just too wet. The farmers couldn’t get their cattle out of the field, they couldn’t class the animals and suddenly the C-grades also dried up.”
Optimistic
Although Maré doesn’t believe that the current high prices are sustainable in the long term, he is cautiously optimistic about what the rest of the year might hold for the red meat industry.
According to him, prices should remain better than last year, especially in light of the lower supply of animals. There also appears to be an upturn in the demand for red meat among South African consumers.
“With the interest rate having decreased, it seems to us that consumers have a bit more disposable income. Even lamb prices are considerably higher than last year.”
The price of store lambs is approximately 17% higher than a year ago, while the price of A2 lamb carcasses is about 22% higher.
He believes the price will still fluctuate considerably throughout the year, but he thinks that the average red meat prices this year could be at least 10% higher than last year. “This will bring a lot of relief, especially if one takes into account that last year we were at the price level of six years ago.”
Maré says the 10% by which farmers are better off will definitely help with sustainability. For farmers it may not yet be extremely profitable again, but he believes they will at least be able to breathe again.
Profitability
To make good profits, the red meat industry will need to generate greater demand for meat, and export is the only way to achieve this. “Locally, there are only so many mouths to feed and only so much money to buy meat, even when the economy grows, there is still a ceiling in terms of how much the demand for red meat can grow,” says Maré.
The volatility of the South African economy also leaves farmers vulnerable during times when consumers have to tighten their belts and buy less meat. To overcome this, South Africa must therefore export more red meat. Export markets can help to stabilize prices when the local buyers’ market is struggling. That is why the red meat industry is now striving to develop foreign markets for almost a quarter of South Africa’s red meat production.
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