Johannesburg – As the braai season approaches, economists expect red meat prices to rise by at least 9 to 15 percent from now until December due to tight supply and increased demand from consumers during the festive season.
Paul Makube, senior agricultural economist at FNB, on Monday said red meat slaughtering had been substantially higher this year compared to the past three years as a result of the drought.
In a statement, Makube said the cumulative sheep slaughter number was currently 111 percent and 69 percent higher than the 2015 and 2014 levels respectively.
But, despite an increase in slaughtering, Makube said consumers should not experience an oversupply of meat which would have resulted in lower prices due to exports and a strong demand for 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 for Class A beef as braai season returns,” Makube said.
“Consumers who prefer to braai lamb can expect to pay between R5.6 and R9.4 per kilogram more for Class A lamb over the festive period.”
Makube said red meat prices were currently relatively stable to strong due to tight supplies as livestock farmers hold on to stock and avoid slaughtering in the hope that pasture conditions will improve should seasonal rains materialise sooner.
He said pork would also benefit from the price gain of red meat.
“However, there won’t be much of a price movement in poultry due to increasing imports,” Makube said.
Makube also 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 normal, instead of above normal rainfall as had been previously estimated, should be expected.
Makube said this was good news as the sector would not have to worry about possible damage resulting from floods, torrential rains and heavy winds, often associated with a strong La Nina that was predicted earlier during the past few months.
“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 that are currently facing losses from the recent drought,” Makube said.
Article source: Siphelele Dludla, African News Agency
Image source: Independent Media