For those involved in the beef industry this year was a perfect storm, according to Roelie van Reenen, the supply chain executive at Beefmaster Group.
He said financially grain farmers had made considerable gains this year, but the profits of beef, chicken and pork industries had been knocked by foot and mouth disease (FMD), Avian flu and African Swine Fever, amongst others.
Paul Makube, a senior agricultural economist at FNB Commercial, said they had seen a negative price growth for beef and pork with poultry mostly flat, while overall livestock slaughter fell by 8% relative to the previous quarter.
"The livestock sub-sector also grappled with disease outbreaks such as the avian influenza in the poultry industry by mid-quarter three and given its sheer size of 42% of total agriculture gross producer value, any decline in the sub-sector activity makes a huge dent on overall agriculture growth," he said.
According to Trade Map, six of the nine provinces were affected by the FMD last year and temporarily halted exports to some markets, most notably China.
Although South African beef exports last year did drop by 12% to 28 422 tons compared to the previous year, this was only slightly lower than the ten-year average.
Van Reenen said FMD impacted local producers by hampering the export opportunity.
"FMD has now largely been contained. This should signal a warning to the industry for 2024, that we need to better manage disease outbreaks to unlock more gains for the industry.”
Saudi Arabia was one of the countries that lifted a 21-year ban on South African beef exports.
“This will potentially open up a huge new market for our products, although we are still waiting for trade to commence as we don’t yet have health certificates in place,” he said.
The Beefmaster Group said the resumption of beef exports to Saudi Arabia offered some compensation for the loss of sales in other parts of the world, due to the Middle East conflict.
“The conflict between Israel and Gaza has impacted on tourist numbers in the surrounding areas of the Middle East, such as Jordan. This is likely going to impact beef exporters to such nations depending on if a ceasefire is reached, which at present does not seem likely,” it said.
Going into next year, Van Reenen said, South Africa was likely to see demand for beef to increase in China, however, this might come with unattractive pricing structures.
"We have already seen this play out recently in other agricultural commodities as there has been a significant decline in pricing structures for SA produce. The world's second-largest economy is struggling with a property market crisis and slow growth,” Van Reenen said.
Over the past 20 years, South Africa had shifted from a net importer of beef to a net exporter.
“This is a great achievement. But the playing field is much bigger now and there are more challenges on the global stage,” he added.
The group said high inflation, especially food price inflation, was likely to relent and there was hope that interest rates would ease next year, which would bring welcome relief to consumers and could boost demand for beef products.
Nevertheless, Van Reenen remained confident that an improved mood both locally and internationally could bode well for sales, especially if the general elections next year went well.
"If we are at the bottom of the cycle, there will be cause for cautious optimism in 2024. We must remember that there is a lot of work being done behind the scenes, and so there is a glimmer of hope on the horizon. Primary producers will still need to tighten their belts and keep investing in their businesses, but they can expect an increase in demand if new markets continue to open,” he said.