Beef outlook for 2020 is positive
Global Animal Protein Outlook 2021 shows that after a year of much uncertainty due to Covid-19, the demand for global animal protein is expected to rise next year.
South African specialist beef producer Beefmaster group chief executive Louw van Reenen said for local and global markets, despite the challenges, there were signs of hope that brought opportunity in 2021.
“After years of drought, farmers will need to replenish their stock, so we expect a long-term recovery to take place. With the prediction of a good 2021 rainy season, farmers will have the opportunity to rebuild their herds,” said Van Reenen.
He said farmers and producers were getting a better price for their product and this should continue into 2021 because of a change in the supply and demand of cattle.
The group said it had adopted a conservative outlook for 2021 and was budgeting for an economic contraction given that the pandemic had severely hit South Africa's economic growth performance, with the gross domestic product (GDP) levels expected to remain below 2019 levels well into 2022.
Statistics SA said on Tuesday that GDP rebounded significantly and increased at an annualised rate of 66.1 percent in the third quarter, largely as a result of the easing of Covid‑19 lockdown restrictions.
This was the strongest pace of expansion since at least 1993 and beat market expectations of 52.6 percent recovery, but it was from a low base following a record 51.7 percent slump in the second quarter.
FNB Agri-Business senior agricultural economist Paul Makube said animal products came out strongly in contribution to agriculture growth. Livestock commodity prices had remained resilient during the quarter, he said.
Van Reenen said: “At the same time, we are continuing with our strategy of muscle-building in the business by increasing capacity and preparing for when the economy does a turnaround. We are scaling up to function at 100 percent throughput.”
The group recently announced an investment of R30 million into plant and equipment upgrades, as well as 30 new jobs.
“The purpose of the upgrades is to ensure the company has capacity to service the needs of a growing beef market. Although we were lucky enough to be classed as an essential service, we did not escape unscathed. Our stock levels were at extremes because we had an oversupply of beef products, mainly because restaurants all over the world were closed, and cattle supply was disrupted because of the foot and mouth disease (FMD) outbreak in Limpopo,” said Van Reenen.
Beefmaster said the year saw good demand for its beef products, which drove sales, while the weakened rand allowed the group to compete internationally. The onset of the pandemic saw the group implement changes at its retail store outlets to allow for home deliveries as well as the launch its online beef delivery service, iBeef.
It also launched one of the first comprehensive biosecurity initiatives focusing on cattle herd health in South Africa.
The initiative, dubbed “Farm to Fork”, delivered value to all stakeholders in the cattle and beef industries, including veterinarians, cattle producers, feedlots and consumers.
BUSINESS REPORT ONLINE