meat industry overview south african feedlot association annual general meeting 9 march 2010
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Meat Industry Overview South African Feedlot Association Annual General Meeting 9 March 2010. David Spies. Contents. International trends Production Consumption Trade Price trends Domestic trends Production Consumption Trade Price Feedlot Short term perspective Scenario’s - PowerPoint PPT PresentationTRANSCRIPT
Meat Industry OverviewSouth African Feedlot Association
Annual General Meeting
9 March 2010David Spies
Contents
• International trends – Production– Consumption– Trade– Price trends
• Domestic trends– Production– Consumption– Trade– Price
• Feedlot– Short term perspective– Scenario’s
• Challenges
2
International trends
3
0
2,000
4,000
6,000
8,000
10,000
12,000
14,00019
99
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
'000
tons
Australia
Argentina
Brazil
China
EU
India
South Af rica
USA
Beef and veal: Production
4
SA 685
Source: FAPRI, 2010
Beef and veal: Production
Source: OECD FAO, 2010 5
-2 -1 0 1 2 3 4 5 6
EuropeDeveloped
North AmericaNorth Africa
Oceania developedWorld
Latin America and CaribbeanAsia and pacif ic
DevelopingSouth Africa
AfricaLDCSSA
Average annual growth rate/ least squire (%)
2010-2019
2000-2009
0
2000
4000
6000
8000
10000
12000
1400019
99
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
'000
ton
Australia
Argentina
Brazil
China
EU
India
South Africa
USA
Beef and veal: Consumption
6
SA 836
Source: FAPRI, 2010
Beef and veal: Consumption
7Source: OECD FAO, 2010
-1 0 1 2 3 4 5
EuropeNorth America
DevelopedWorld
Latin America and CaribbeanSouth AfricaDeveloping
Asia and pacif icOceania developed
North Af ricaLDC
AfricaSSA
Average annual growth rate/ least squire (%)
2010-2019
2000-2009
Overall increase in per capita meat consumption between the 2007-09 period and 2019
8Source: OECD FAO, 2010
0
10
20
30
40
50
60
70
8019
99
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Kg/c
apita
Australia
Argentina
Brazil
China
EU
India
South Africa
USA
Beef and veal: Per capita consumption
9
SA 17.23
Source: FAPRI, 2010
Beef and veal: Per capita consumption
10Source: OECD FAO, 2010
-2 -1 0 1 2 3 4
North AmericaWorld
Latin America and CaribbeanDeveloped
EuropeDeveloping
LDCAsia and pacif ic
North Af ricaAfrica
SSASouth Africa
Oceania developed
Average annual growth rate/ least squire (%)
2010-2019
2000-2009
Imports 2009
11Source: ITC, 2011
Exports 2009
12Source: ITC, 2011
Beef and veal: Imports
13Source: OECD FAO, 2010
-20 -15 -10 -5 0 5 10 15
LDCSouth Africa
Oceania developedDeveloped
North AmericaLatin America and Caribbean
SSAWorld
EuropeAsia and pacif ic
DevelopingAfrica
North Af rica
Average annual growth rate/ least squire (%)
2010-2019
2000-2009
Beef and veal: Exports
14Source: OECD FAO, 2010
-20 -15 -10 -5 0 5 10 15
SSAAfrica
EuropeNorth Africa
Oceania developedSouth Africa
DevelopedLDC
WorldNorth America
DevelopingAsia and pacif ic
Latin America and Caribbean
Average annual growth rate/ least squire (%)
2010-2019
2000-2009
80
90
100
110
120
130
140
150
160
170
180
1/19
907/
1990
1/19
917/
1991
1/19
927/
1992
1/19
937/
1993
1/19
947/
1994
1/19
957/
1995
1/19
967/
1996
1/19
977/
1997
1/19
987/
1998
1/19
997/
1999
1/20
007/
2000
1/20
017/
2001
1/20
027/
2002
1/20
037/
2003
1/20
047/
2004
1/20
057/
2005
1/20
067/
2006
1/20
077/
2007
1/20
087/
2008
1/20
097/
2009
1/20
107/
2010
Meat Price Index
International meat price index
15Source: FAO, 2011
International meat price indexes
16
0
50
100
150
200
25019
90-0
1
1990
-11
1991
-09
1992
-07
1993
-05
1994
-03
1995
-01
1995
-11
1996
-09
1997
-07
1998
-05
1999
-03
2000
-01
2000
-11
2001
-09
2002
-07
2003
-05
2004
-03
2005
-01
2005
-11
2006
-09
2007
-07
2008
-05
2009
-03
2010
-01
Poultry Meat
Pig Meat
Bovine Meat
Ovine Meat
Source: FAO, 2011
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010U
SD/T
on
Bovine Meat (Argentina, frozen beef cuts, export unit value) Bovine Meat (Japan, beef import price, cif, chilled beef cuts)Bovine Meat (USA, beef export, export unit value)
Sources:S.A.G.P.y A. (Secretaría de Agricultura, Ganadería, Pesca y Alimentos), A.L.I.C. (Agriculture & Livestock Industries Corporation), U.S.D.A. : U.S. trade exports
International beef prices
17
Local trends
18
Local trends: Beef production and consumption
19Source: BFAP, 2010
South African meat consumption
20Source: BFAP, 2010
South African meat consumption
21Source: OECD FAO, 2010
0
250
500
750
1000
1250
1500
1750
2000
2250
Beef Chicken Sheep meat Pork
Thou
sand
tons
Average consumption: 2007-2009 Consumption: 2019
4%
59%
24% 23%
FAPRI, 2010Beef 21%Chicken 27%
Per capita beef consumption vs per capita disposable income
22Source: SARB & DAFF, 2010
10
12
14
16
18
20
22
24
26
15000
16000
17000
18000
19000
20000
21000
22000
23000
2400019
70/7
119
71/7
219
72/7
319
73/7
419
74/7
519
75/7
619
76/7
719
77/7
819
78/7
919
79/8
019
80/8
119
81/8
219
82/8
319
83/8
419
84/8
519
85/8
619
86/8
719
87/8
819
88/8
919
89/9
019
90/9
119
91/9
219
92/9
319
93/9
419
94/9
519
95/9
619
96/9
719
97/9
819
98/9
919
99/0
020
00/0
120
01/0
220
02/0
320
03/0
420
04/0
520
05/0
620
06/0
720
07/0
820
08/0
9
Kg/y
ear
Rand
Per capita disposable income Per capita consumption
15-16 kg/year
Per capita sheep consumption vs per capita disposable income
23
0
1
2
3
4
5
6
7
8
9
10
15000
16000
17000
18000
19000
20000
21000
22000
23000
2400019
70/7
119
71/7
219
72/7
319
73/7
419
74/7
519
75/7
619
76/7
719
77/7
819
78/7
919
79/8
019
80/8
119
81/8
219
82/8
319
83/8
419
84/8
519
85/8
619
86/8
719
87/8
819
88/8
919
89/9
019
90/9
119
91/9
219
92/9
319
93/9
419
94/9
519
95/9
619
96/9
719
97/9
819
98/9
919
99/0
020
00/0
120
01/0
220
02/0
320
03/0
420
04/0
520
05/0
620
06/0
720
07/0
820
08/0
9
Kg/y
ear
Rand
Per capita disposable income Per capita consumption
Source: SARB & DAFF, 2010
Imports: Beef 2009
24Source: ITC, 2011
Exports: Beef 2009
25Source: ITC, 2011
Imports: Live cattle 2009
26Source: ITC, 2011
Exports: Live cattle 2009
27Source: ITC, 2011
SA Beef vs calf prices: Long term
28Source: BFAP, 2010
Local beef price trends: Nominal
Feb-10 Feb-11 Sep-10 Sep 10 to Feb 11 Feb 10 to Feb 11Class A2/A3 2337 2686 2276 18.0% 14.9%Class AB2/AB3 2178 2594 2174 19.3% 19.1%Class B2/B3 2130 2445 2117 15.5% 14.8%Class C2/C3 1987 2287 1953 17.1% 15.1%Weaner 1547 1771 1604 10.4% 14.5%Average 16.1% 15.7%
500
1000
1500
2000
2500
3000
Jun-01
Oct-01
Feb-02
Jun-02
Oct-02
Feb-03
Jun-03
Oct-03
Feb-04
Jun-04
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
c/kg
Class A2/A3 Class AB2/AB3 Class B2/B3 Class C2/C3 Weaner
Source: AMT, 2011
Good conditions: RainfallLow maize priceLow supply of weanersHOWEVERWinter on the waySupply A2A3 carcass will increaseDecreasing price
Local beef price trends: Real (CPI:2008=100)
Feb-10 Feb-11 Sep-10 Sep 10 to Feb 11 Feb 10 to Feb 11Class A2/A3 2121 2356 2025 16.4% 11.1%Class AB2/AB3 1976 2275 1935 17.6% 15.1%Class B2/B3 1933 2145 1883 13.9% 11.0%Class C2/C3 1803 2006 1738 15.5% 11.3%Weaner 1404 1554 1427 8.9% 10.7%Average 14.4% 11.8%
500
1000
1500
2000
2500
3000
Jun-01
Oct-01
Feb-02
Jun-02
Oct-02
Feb-03
Jun-03
Oct-03
Feb-04
Jun-04
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
c/kg
Class A2/A3 Weaner
Source: AMT, 2011
Weaner:A2/A3 beef carcass price ratio
31
0.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
0.80
Jun-01
Oct-01
Feb-02Jun
-02O
ct-02Feb-03Jun
-03O
ct-03Feb-04Jun
-04O
ct-04Feb-05Jun
-05O
ct-05Feb-06Jun
-06O
ct-06Feb-07Jun
-07O
ct-07Feb-08Jun
-08O
ct-08Feb-09Jun
-09O
ct-09Feb-10Jun
-10O
ct-10Feb-11Jun
-11O
ct-11
Weaner:A2/A3 price ratio Average Ratio
Source: AMT & GrainSA, 2011
Provincial price variation
32
1700
1900
2100
2300
2500
2700
2900
Wee
k 20
Wee
k 24
Wee
k 28
Wee
k 34
Wee
k 38
Wee
k 42
Wee
k 46
Wee
k 50
Wee
k 5
Wee
k 9W
eek
13W
eek
17W
eek 2
2W
eek
26W
eek
30W
eek
34W
eek
38W
eek
42W
eek
46W
eek
50W
eek
4W
eek
8W
eek
12W
eek
16W
eek 2
0W
eek
24W
eek
28W
eek
32
c/kg
FS NW NC LP
1000
1100
1200
1300
1400
1500
1600
Wee
k 20
Wee
k 24
Wee
k 28
Wee
k 34
Wee
k 38
Wee
k 42
Wee
k 46
Wee
k 50
Wee
k 5W
eek
9W
eek
13W
eek 1
7W
eek
22W
eek
26W
eek
30W
eek
34W
eek
38W
eek
42W
eek
46W
eek
50W
eek
4W
eek
8W
eek
12W
eek
16W
eek
20W
eek
24W
eek
28W
eek
32
C/kg
FS NW NC LP
1500
1700
1900
2100
2300
2500
2700
Wee
k 20
Wee
k 24
Wee
k 28
Wee
k 34
Wee
k 38
Wee
k 42
Wee
k 46
Wee
k 50
Wee
k 5W
eek 9
Wee
k 13
Wee
k 17
Wee
k 22
Wee
k 26
Wee
k 30
Wee
k 34
Wee
k 38
Wee
k 42
Wee
k 46
Wee
k 50
Wee
k 4W
eek 8
Wee
k 12
Wee
k 16
Wee
k 20
Wee
k 24
Wee
k 28
Wee
k 32
c/kg
FS NW NC LP
1500
1600
1700
1800
1900
2000
2100
2200
2300
Wee
k 20
Wee
k 24
Wee
k 28
Wee
k 34
Wee
k 38
Wee
k 42
Wee
k 46
Wee
k 50
Wee
k 5
Wee
k 9W
eek
13W
eek
17W
eek
22W
eek
26W
eek
30W
eek
34W
eek 3
8W
eek
42W
eek
46W
eek
50W
eek 4
Wee
k 8
Wee
k 12
Wee
k 16
Wee
k 20
Wee
k 24
Wee
k 28
Wee
k 32
C/kg
FS NW NC LP
A2/A3 B2/B3
C2/C3 Weaner
Local price trends: Lamb/mutton: Nominal
Feb-10 Feb-11 Sep-10 Sep 10 to Feb 11 Feb 10 to Feb 11Class A2/A3 3710 4647 4204 10.5% 25.3%Class AB2/AB3 3201 4150 3600 15.3% 29.6%Class B2/B3 3217 3917 3567 9.8% 21.8%Class C2/C3 2716 3621 3199 13.2% 33.3%Average 12.2% 27.5%
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
Jun-01
Oct-01
Feb-02
Jun-02
Oct-02
Feb-03
Jun-03
Oct-03
Feb-04
Jun-04
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
c/kg
Class A2/A3 Class AB2/AB3 Class B2/B3 Class C2/C3
Source: AMT, 2011
Local price trends: Lamb/mutton: Real (CPI:2008=100)
Feb-10 Feb-11 Sep-10 Sep 10 to Feb 11 Feb 10 to Feb 11Class A2/A3 3367 4076 3740 9.0% 21.1%Class AB2/AB3 2905 3640 3203 13.7% 10.3%Class B2/B3 2919 3436 3173 8.3% 8.7%Class C2/C3 2465 3176 2846 11.6% 15.5%Average 10.6% 13.9%
900
1400
1900
2400
2900
3400
3900
4400
4900
Jun-01
Oct-01
Feb-02
Jun-02
Oct-02
Feb-03
Jun-03
Oct-03
Feb-04
Jun-04
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
c/kg
Class A2/A3 Class C2/C3
Source: AMT, 2011
Feedlot prospects & scenario’s
35
Feedlot margins
36
Item 2007 2008 2009 2010 2011Purchase weight 240 240 240 240 240AGD (kg/day) 1.6 1.6 1.6 1.6 1.6Days on feed 128 128 128 128 128Dressing percentage 58 58 58 58 58Carcass weight 445 445 445 445 445Weaner price (Oct) R 15.31 R 12.98 R 12.64 R 14.87 R 15.86A2/A3 meat price (Jan-Feb) R 18.14 R 22.52 R 24.70 R 23.43 R 26.45Weaner:A2/A2 price ratio 0.84 0.58 0.51 0.63 0.60Yellow maize price (Okt-Jan) R 1,267 R 1,932 R 1,741 R 1,451 R 1,420Feed margin R 197 R -140 R 373 R 587 R 979Price margin R -1,149 R 20 R 405 R -307 R -125Total margin (profit/head) R -953 R -121 R 778 R 279 R 855
Source: Calculations based on: AMT & GrainSA, 2011
Maize price trends
37
500
700
900
1100
1300
1500
1700
1900
2100
2300
5
6
7
8
9
10
11
12
13Ju
n-0
1O
ct-0
1Fe
b-0
2Ju
n-0
2O
ct-0
2Fe
b-0
3Ju
n-0
3O
ct-0
3Fe
b-0
4Ju
n-0
4O
ct-0
4Fe
b-0
5Ju
n-0
5O
ct-0
5Fe
b-0
6Ju
n-0
6O
ct-0
6Fe
b-0
7Ju
n-0
7O
ct-0
7Fe
b-0
8Ju
n-0
8O
ct-0
8Fe
b-0
9Ju
n-0
9O
ct-0
9Fe
b-1
0Ju
n-1
0O
ct-1
0Fe
b-1
1Ju
n-1
1O
ct-1
1
Mai
ze R
/ton
R/U
SD
Exchange tare Yellow maize White maize
Source: GrainSA, 2011
Feedlot prospects: Weaner & beef price changes
38
Mar 06 to Jul 06 Mar 07 to Jul 07 Mar 8 to Jul 8 Mar 09 to Jul 09 Mar 10 to Jul 10Class A2/A3 2.6% 0.3% -4.2% -12.8% -3.9%Class AB2/AB3 -0.9% -0.1% -3.3% -11.3% -1.5%Class B2/B3 1.7% 9.0% 4.6% -7.7% 0.1%Class C2/C3 6.7% 11.5% 8.1% 1.8% 1.3%Weaner 4.3% 9.8% -4.6% -3.7% 2.4%Average 2.9% 6.1% 0.1% -6.7% -0.3%
Source: Calculations based on: AMT, 2011
Net negative effect 6.3%
Feedlot scenario’s (economic vs management factors)
*Weaner price – Feb 2011A2/A3 price – May-June 2011Yellow maize Feb- May 2011
Item 2011 Base Scenario 1 Scenario 2 Scenario 3 Scenario 4*Purchase weight 240 240 200 200 240AGD (kg/day) 1.6 1.8 1.6 1.8 1.6Days on feed 128 114 125 111 128Dressing percentage 58 58 58 58 58Live weight at slaughter 445 445 400 400 445Carcass weight 258 258 232 232 258Weaner price (Oct) R 15.86 R 15.86 R 15.86 R 15.86 R 17.71A2/A3 meat price (Jan-Feb) R 26.45 R 26.45 R 26.45 R 26.45 R 26.85Yellow maize price (Okt-Jan) R 1,420 R 1,420 R 1,420 R 1,420 R 1,641Feed margin R 979 R 1,206 R 1,199 R 1,395 R 722Price margin R -125 R -125 R -104 R -104 R -513Total margin (profit/head) R 855 R 1,082 R 1,095 R 1,291 R 209Change in profit from base (%) 27 28 51 -81
Source: Calculations based on: AMT & GrainSA, 2011 and own estimations
Calve: Carcass price ratio of 0.66
Producers
Abattoir•Adult female (51%)•Bulls (35%)•Castrated males (41%)•Calves (21%)
Butchery•Adult female (6%)•Bulls (5%)•Castrated males (12%)•Calves (2%)
Retailer
Feedlot•Adult female (7%)•Young females (33%)•Bulls (5%)•Castrated males (18%)•Calves (49%)
Wholesale/deboning
Commercial farms•Adult female (10%)•Young females (33%)•Bulls (45%)•Calves (7%)
Agents•Adult female (14%)•Young females (33%)•Bulls (5%)•Castrated males (24%)•Calves (14%)
Auction system•Adult female (11%)•Bulls (5%)•Castrated males (6%)•Calves (7%)
Primary production Processing/wholesale & retail
Cattle marketing in the FS
Source: Spies, Jooste & Taljaard, 2011
70%
Producers
Abattoir•Adult female (40%)•Young females (50%)•Breeding rams (28%)•Castrated males (45%)•Lambs(41%)
Butchery•Adult female (9%)•Castrated males (9%)•Lambs(5%)
Retailer
Feedlot•Adult female (9%)•Young females (17%)•Breeding rams(11%)•Castrated males (6%)•Lambs (36%)
Wholesale/deboning
Commercial farms•Adult female (9%)•Breeding rams (44%)•Lambs(2%)
Agents•Adult female (10%)•Young females (17%)•Breeding rams (6%)•Castrated males (27%)•Lambs (8%)
Auction system•Adult female (9%)•Breeding rams (11%)•Lambs (2%)
Primary production Processing/wholesale & retail
Lamb marketing in the FS
Source: Spies, Jooste & Taljaard, 2011
46%
Challenges
Pagina 42
6.8 billion – in the last 50 years the population has more than doubled
9 billion – forecast global population in 2045
100% – growth in global demand for meat by 2050
100% – growth in meat consumption in China in the past 15 years
Source: Korver 2010
Big responsibility for food industry: Feed the world & offer more from less
Challenges….
Environment
Quality
Sustainability
Production
Productivity
Animal welfare
Now
Future
Source: Korver 2010 43
Changing demand and prioritiesSwitch from productivity focused model to food safety & sustainable business model
Challenges…
• Information availability – Product flow, Financial flow,
Information flow at every level of the value chain
• Producers– Commercial
» 60 – 70 % non-official» 20 – 30 % official
– Developing» 80 % no source of information» 10 % official» 10 % non official
• Processors– 100% non-official
• Retailers– 100% non-official
Production practicesInput useAnimal health issuesMarkets (physical)PricesProduct standardsTraceabilityRisk management
Source: Spies, Jooste & Taljaard, 2011
Challenges…
• Stimulate local demand• Educate consumers
– Quality• Guaranteed safety• Palatability/eating experience
– Experiencing the same eating quality when purchasing a piece of red meat periodically from the same place with the same preparation method.
• Nutritional information, preparation methods/packaging• Increase local supply
– Productivity of the emerging and developing producers• Commercial producers
– Calving percentage (80%) and off-take rate (33%)– Lambing percentage (93%) (and off-take rate (35%)
• Developing producers in the FS – Calving percentage (30%) and off-take rate (12%)– Lambing percentage (13%) and off-take rate (2.3%)
45Source: Spies, Jooste & Taljaard, 2011
International beef off-take rates
AUS 28%NZ 37%EU 34%US 38%ARG, BRA, UR, PAR 20%
Scholtz & Bester, 2008)
