An agricultural economist at FNB, Paul Makube, explains that the reasons for the current strength in meat prices are a combination of factors. 

These include “the tight supplies due to the pedestrian livestock slaughter, reduced imports of chicken amid higher prices, and the surprisingly resilient consumer demand despite tough economic conditions with the consumer’s financial welfare under strain.”

Additionally, he says that livestock producers have been facing enormous cost pressures stemming from a surge in raw feed input prices which necessitated the cost recovery as profit margins were severely squeezed.

“The price of maize, a major ingredient in feed manufacturing, has so far increased by 43% and 28% y/y for the white and the yellow maize respectively to an average of R4,989/ton and R4,837/ ton.

“The price of soybeans, a major source of plant protein in livestock feed, so far averaged R10,561/ton which is 39% higher y/y.

ALSO READ: Consumer food price inflation accelerated further in August

“South Africa’s November 2022 consumer price inflation (CPI) surprised on the downside to 7.4% year-on-year (y/y) from 7.6% September, but was still off the 2022 peak of 7.8% y/y reached during July, according to recent data from Statistics South Africa (Stats SA).

“The monthly CPI slowed by 0.3% month-on-month (m/m) in November from 0.4% m/m the previous month.

“After steadying in October, the food CPI rebounded by 0.5 percentage points in November 2022 to 12.8% y/y and still the highest level since April 2009 but decelerated by 0.5% m/m 0.9% higher month-on-month (m/m),” explains Makube.

He further adds that the SA’s food CPI sub-index shows that the November meat CPI stabilised but it still reached the highest level in 14 months at 10.5% y/y.

Meat prices:

• Beef T-bone steak surged by 18% y/y at R135.48/kg;
• Brisket and chuck increased 11.8% and 10.4% respectively y/y;
• Pork ribs and fillets posted modest gains of 3.9% and 2.8% y/y at R94.59/kg and R104.62/kg;
• Pork chops fell by 3.8% y/y at R89.55/kg;
• Lamb chops rose by 4.8% y/y to R195.55/kg; and
• Chicken prices were up across most categories with an increase of 7.2% at R63.85/kg for fresh whole birds while the individually quick frozen (IQF) 2 kg chicken portions rose by 5.1% y/y at R86.69.

Despite the increases, Makube says they expect to see some reprieve for consumers early in the new year. This is because of the expected lower seasonal demand post the December holidays as the tight economic environment with costs of electricity and transport still being elevated, is likely to place downward pressure on meat prices.

OFM News