By Barrie Gibbs, Chairman of the South African Pork Producers’ Organisation (SAPPO)
Farming anywhere in the world is not easy. In South Africa farming is particularly difficult, not least because of our political history and the impact this has had on communities. Further muddying the waters is the fact that South Africa is a net agricultural importer, a situation that places even more pressure on local farmers to strive for food security in our region.
Government has, and continues, to work towards empowering small and emerging farmers. SAPPO supports this vision. As an organisation we work hard to educate and support emerging farmers. More often than not successful farmers assist emerging farmers to make their operations sustainable and financially rewarding.
But there are many challenges consumers are unaware of and the often thankless task of providing food for the table remains unrecognised. Consumers mistakenly believe farmers grow rich by sitting back and watching the profits roll in while others do the work. Nothing could be further from the truth.
Margins last year were tighter than ever; commercial pig farmers operated at a loss for nine months of the year. Rising fuel costs, increased labour costs and a decline in the price of pork are just some of the factors that keep farmers awake at night. The most significant costs, though, are those associated with feeding our animals which represents 75 percent of input costs for pork producers.
We hoped that 2014 would be a better year than last year but with escalating input costs, especially feed prices the past four months, I am not so sure that it will be.
Although there is not enough maize in the country, the Chicago price is usually an indication of what we can expect. The Chicago price is declining, but our price is rising. This simply does not make sense. At the time of writing we are staring down the barrel of a 25 percent increase in grain prices since 1 December 2013.
Added to this is the imperative of all pig farmers to convert their sow crates to open pens. It’s a process we all support (and already 50 percent of commercial farmers have made the conversions) but it comes at a cost of roughly R2 000 a sow. Do the maths. A farmer with 2 000 sows is looking at an outlay of R4 million, not an insignificant amount.
I believe that the only way for pig farmers to keep their heads above water is for us to stand firm to maintain our prices. We must also work to limit pork imports and look at ways to increase pork exports.
While there are some farmers who will absorb these and other costs (and operate at a loss), there are many more who will not and who will simply go out of business. Those hardest hit are undoubtedly the small, emerging farmers who face two options: continue operating at a loss or close down.
As a representative organisation we remain supportive but we simply cannot tolerate a situation where grain prices rise by 25 percent while the price of our product remains static (or, in some instances, even declines).
What does this all mean?
In the short-term it’s clear that thousands of jobs on pig farms are in jeopardy. In the long-term many pig farmers’ livelihoods are at stake. Let me be clear: pig farming (and many other forms of farming) in South Africa is in a crisis.
Government has a massive role to play in ensuring food security in the country. And this food security does not come overnight. The right conditions need to be created to ensure local pork producers remain in business, thereby contributing to the economy instead of suffering massive losses.
At the same time government has a responsibility to create an environment where sustainable jobs are created.
The consumer’s role
Consumers, too, have a role. An increase in the price of pork is not an indication of greed in the industry nor of any hubris among pig farmers that their product is superior to any other. It’s an indication of the economy in general and the continued increase in prices that can no longer be absorbed to the extent that they have been in the past.
With this in mind, it is important that consumers understand that pork prices are likely to increase as input costs increase. This is a sign of the economic times and a measure aimed at survival rather than an attempt by pork producers to grow their bottom line.