SA livestock industry faced with rising input costs

Source: Wandile Sihlobo, Agricultural Economics Today, 21 September 2020, photo credit: Commercial Farmers’ Union Zimbabwe

This must be a challenging year for the animal feed companies and by extension the livestock and poultry industry. The years of a large harvest like the 2019/20 season are typically followed by a notable decline in commodity prices which is beneficial to the livestock and poultry industry. We had the second largest maize harvest on record, about 15.5 million tonnes (yellow maize at 6.5 million tonnes and white maize: 9.0 million tonnes) and the third-largest soybean harvest on record (about 1.26 million tonnes); yet prices didn’t reflect this increased production.

On 21 September 2020, soybean spot price reached a record R 8 090 per tonne, up by 40% y/y. Meanwhile, yellow maize, which is also a key input along with soybeans in animal feed, traded at R3 284 per tonne, up by 22% y/y. The weaker domestic currency, coupled with growing demand from China and other Asian markets, are among the key factors underpinning the uptick in maize and soybean prices. China is rebuilding its pig herd, the world’s largest, which was devasted by the deadly African swine fever last year. This process has led to a notable increase in global soybean imports in the recent month, and in turn, prices.
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The South African Pork Producers’ Organisation (SAPPO) coordinates industry interventions and collaboratively manages risks in the value chain to enable the sustainability and profitability of pork producers in South Africa.