A PROFILE OF THE SOUTH AFRICAN BEEF MARKET VALUE CHAIN

Transcription

1 A PROFILE OF THE SOUTH AFRICAN BEEF MARKET VALUE CHAIN 2017 Directorate Marketing Tel: Private Bag X 15 Fax: Arcadia MogalaM@daff.gov.za

2 TABLE OF CONTENTS 1. DESCRIPTION OF THE INDUSTRY INTRODUCTION PRODUCTION AREAS PRODUCTION TRENDS LOCAL CONSUMPTION EMPLOYMENT MARKET STRUCTURE DOMESTIC MARKET IMPORT EXPORT ANALYSIS Exports Imports BEEF MARKET VALUE CHAIN MARKET INTELLIGENCE EXPORT TARIFFS IMPORT TARIFFS PERFORMANCE OF SOUTH AFRICAN BEEF INDUSTRY IN EXPORTS IMPORTS ACKNOWLEDGEMENTS/ REFERENCES

3 Million Rand 1. DESCRIPTION OF THE INDUSTRY 1.1 Introduction Beef industry in South Africa is characterized by its dualistic nature of the sector. There is a clear difference between formal (commercial) sector and informal (non-commercial) beef sector. Unlike non-commercial sector, the commercial beef sector is well developed and mature in South Africa. The beef informal (noncommercial) sector may further be divided into two subsectors namely smallholder farmers and subsistence farmers. Smallholder farmers keep their cattle and sell them during Easter and festive seasons, religious purposes and also during their cash strapped seasons. Whilst subsistence farmer do not keep their cattle for economic reasons however for household food security purposes. Typically, these two informal subsectors are not keeping records of their animal stocks, the buyer and seller enter into mouth-to-mouth agreement, followed by exchange of money and cattle then transactions will not be recorded. These informal subsectors are also known of less knowledgeable of animal health, disease control and animal development issues as well as policies regarding animals in South Africa. Beyond their role in generating food and income, cattle are a valuable asset, serving as a store of wealth, collateral for credit an essential security net during calamitous times for informal sector. The beef industry is the second fastest growing commodity in agricultural sector following the broiler sector. This is driven by income growth and supported technological and structural change. In South Africa, stock farming is the only viable agricultural activity in a large part of the country. Approximately 80% of South African agricultural land is suitable for extensive grazing. Areas for grazing declined owing to expanding human settlements and other activities such as mining, crops, forestry and conservation. 80% of the total cattle heads are for beef cattle and the remaining 20% is for dairy cattle. The South African primary beef production is unique due to its dualistic nature of agricultural sector. The gross value of cattle and calves slaughtered in South Africa from 2006/07 to 2015/16 is depicted in figure 1 below. The gross value of beef production is dependent on the number of cattle slaughtered and the prices received by producers from buyers. The gross value of beef production increased from R13 billion in 2006/07 to R30.6 billion in 2015/16. This is an increase of 135 % during the said period. This is due to the increased consumption of beef during this past decade. The average gross value of beef produced during this period amounted to R19 billion per annum Figure 1: Gross value of cattle and calves slaughtered 2006/ / / / / / / / / /16 Years Source: Statistics and Economic Analysis, DAFF 3

4 1.2 Production Areas Beef is produced throughout South Africa. Figure 2 below shows the beef production per province during 2016 production year. The amount of beef produced depends on the infrastructure such as feedlots and abattoirs, not necessarily by the number of cattle available in those areas. South Africa has highly developed transport infrastructure that allows movement of cattle and calves from one area to another, even from other countries such as Namibia. According to figure 2, Mpumalanga accounts for the greatest share of beef production in South Africa accounting for 21% of the beef produced in 2016 followed by Free State, Gauteng, KwaZulu- Natal and North West accounting for 19%, 14%, 11% and 9% respectively. Figure 2: Beef slaughtering per province during 2016 NORTH WEST 9% WESTERN CAPE 5% EASTERN CAPE 8% NORTHERN CAPE 8% FREESTATE 19% MPUMALANGA 21% GAUTENG 14% Source: Red Meat Levy Admin LIMPOPO 5% KWAZULU NATAL 11% 1.3 Production Trends South Africa currently has approximately 430 abattoirs slaughtering cattle, pigs and sheep on an annual basis. Approximately 40% of all slaughterings are performed by abattoirs that may slaughter an unlimited number of animals (Class A) and approximately 60% of cattle are slaughtered by highly regulated abattoirs (Class A & B). Most of these abattoirs have linkages with feedlots. The total amount of beef produced during the past ten years amounted to 9 million tons. Figure 3 below show the slaughtering of cattle and production of beef during the period 2006/07 until 2015/16. 4

5 Thousand tons Thousand tons Slaughterings (1000 head) Figure 3: Cattle slaughtering and beef production 1 200, ,0 800,0 600,0 400,0 200,0 0, Production Slautering Source: Statistics and Economic Analysis, DAFF Figure 3 above shows that slaughtering and production of beef followed similar trend from 2006/07 to 2015/16. Beef production and slaughtering declined from 2006/07 to 2007/08 and both have picked up from 2007/08 to 2009/10. They both shown a slight decrease from 2009/10 to 2011/12. The decline in 2007/08 might have been caused by the global economic meltdown. However, there is an improvement of beef production and increased number of cattle slaughtered due to drought during 2014/15. An increase of 26% in production and 19% of cattle slaughtered was experienced in 2015/16 compared to 2006/ Local Consumption Technically, the beef supply chain begin when the cattle are slaughtered for meat consumption. Figure 4 below represents the production and consumption of beef. Figure 4 depict whether the country is self-sufficient in terms of beef production or not. The figure indicates that South African beef production and consumption have been exchanging a high position throughout the period under analysis. However, during 2014/15 and 2015/16 production was higher than consumption and this makes South Africa self-sufficient as beef production satisfies the local demand during the said period. Figure 4: Beef production and consumption 1 200, ,0 800,0 600,0 400,0 200,0 0,0 2006/ / / / / / / / / /16 Production Consumption Source: Statistics and Economic Analysis, DAFF 5

6 Rands/kg Production and consumption of beef increased by 5% and 4.7% respectively during the period 2015/16 as compared to 2014/15. For the past decade production increased by 26% whilst consumption increased by 24%. This might be due to the increased affordability of consumers, changes in consumer diets to meat and also population increase. Both production and consumption followed the same trend. They moved on an increasing trend from 2006/07 to 2015/16. The decline during 2007/08 to 2008/09 was due to the global economic meltdown, which led to a decreased disposable income of a large number of consumers. During 2009/10, beef production and consumption experienced some increases because the global economic meltdown started to ease and also due to the FIFA world cup which was hosted in South Africa. 1.5 Employment Commercial farmers are estimated at and employ people. Emerging farmers and communal farmers are at 3 million and employ 9 million people. There are approximately 100 commercial feedlots with employees in South Africa and 430 abattoirs. Beef industry is a major contributor to livelihoods with people who are dependent on the livestock industry. 2. MARKET STRUCTURE 2.1. Domestic Market The red meat industry evolved from a highly regulated environment to one that is totally deregulated today. Various policies, such as the distinction between controlled and uncontrolled areas, compulsory levies payable by producers, restrictions on the establishment of abattoirs, the compulsory auctioning of carcasses according to grade and mass in controlled areas, the supply control via permits and quotas, the setting of floor prices, removal scheme, etc., characterized the red meat industry before deregulation commenced in the early 1990s. Since the deregulation of the agricultural marketing dispensation in 1997, the prices in the red meat industry are determined by demand and supply forces. Price formation is one of the important forces in making decisions regarding production and marketing of beef and beef products. Average producer prices of beef from 2006/07 to 2015/16 are illustrated in Figure 5. 40,0 35,0 30,0 Figure 5: Average beef producer prices 25,0 20,0 15,0 10,0 5,0 0,0 2006/ / / / / / / / / /16 Years Source: Statistics and Economic Analysis, DAFF Figure 5 shows that prices of beef increased significantly from 2006/07 to 2015/16 mainly due to increased consumption caused by rising living standards of a large number of consumers and consumer s diet change 6

7 Thousand tons from field crops to meat and also population increase. There was an increase of R14.20/Kg in 2015/16 compared to 2006/07. The prices may continue shooting up as the cattle producers are currently battling to rebuild their herds due to increased slaughtering from the past drought season Import Export Analysis Figure 6 compares volumes of imports and exports for beef from 2007 to Source: Quantec EasyData Figure 6 indicates that South Africa s imports and exports were fluctuating during the period under analysis. Imports of beef were higher than exports from 2007 and This automatically makes South Africa a net importer of beef during the specified period. From 2012 to 2015 imports of beef has shown a decreasing trend whilst exports are increasing. From 2014 to 2016 exports exceeded imports and this was led by South Africa being declared foot and mouth disease free by the International Animal Health Organisation. Due to this declaration, there was more international markets gained. South Africa exported more beef in 2016 as compared to all years under review. There was a significant increase of tons of export quantity and an increase of 707 tons of import quantity during 2016 compared to Exports Figure 6: Exports and imports of beef Exports Imports ,7 19,4 The export value of beef followed the same trend of export quantity except in 2007, 2011 and South Africa exported tons of beef in 2016 yielding an export value of R2 billion. There was a significant increase of 29% of quantity of beef exported during the period 2015 as compared to 2014 and export value showed an increase of 55% during 2015 relative to The quantity and the value for exports of beef are shown in Figure 7 below. 7

8 Thousand tons Million Rands Figure 7: Beef exports Quantity Value Source: Quantec EasyData Figure 7 indicates that beef exports quantity was increasing very slowly in 2007 to 2009 and then started increasing faster in 2010 and In 2012 the exports quantity decreased slightly then followed by an increase from 2013 to 2016, this may be due to South Africa being declared foot and mouth disease free which opened export market opportunities. Export quantity reached its lowest in 2007 during the period under analysis. According to Figure 7, profit from beef exports was under pressure from 2010 to 2012 relative to other years as more quantities were exported at a lower value. Figure 8 below shows the main importing continents for South African beef during the past decade Figure 8: Exports of beef to the continents Source: Quantec EasyData Africa Americas Asia Europe Oceania Antarctica South Africa was mainly exporting to Africa and Asia throughout the period under analysis. Africa commanded the highest exports of beef from South Africa from 2007 to In 2015 and 2016, Asia outstripped Africa and took a lead in the share of beef exported by South Africa to the continents. The demand for beef in Asian countries continues to grow. In total Africa commanded 118 million kilograms of beef from South Africa which accounts for 67% and Asia was the second by 30 million kilograms during the past decade. Oceania commanded the lowest South African beef exports quantity during the period under analysis. 8

9 Kilograms Tons The following Figures 9 to 13 give an indication of where within the continents (Africa, Europe, Asia and Oceania) is beef from South Africa exported Figure 9: Beef export quantities to SADC Source: Quantec EasyData Angola DRC Mauritius Malawi Mozambique Seychelles Tanzania Zambia Zimbabwe Mozambique continues to be the highest importer of South African beef within SADC countries. Figure 9 displays that beef produced in South Africa was mainly exported to Mozambique which has commanded the highest beef exports throughout the decade except in 2008 only. During this period (2008) Angola took the lead, which made it the second country to obtain the highest beef exports from South Africa. Mozambique reached a new peak of 4.8 million kilograms of beef from South Africa in Tanzania was the lowest importer of South African beef within SADC countries. In total, Mozambique commanded 25 million kilograms of South African exported beef followed by Angola with 6.8 million kilograms. Democratic Republic of Congo and Mauritius commanded just above 3 million each Figure 10: Beef export quantities to West Africa Côte d'ivoire Ghana Liberia Mali Nigeria Saint Helena Sierra Leone Senegal Source: Quantec EasyData 9

10 Kilograms Kilograms It is clearly indicated from Figure 10 above that South African beef is exported to Nigeria in Western Africa throughout the past decade. South African beef exports to West Africa decreased in 2015 and Nigeria reached its new peak of kilograms during 2013 and this was followed by a drastic decrease of 20% of South African beef imports during Ghana absorbed the second highest volume of South African beef exports in 2007 and again from 2009 to In total for the period under analysis, Mali and Sierra Leone were the lowest importers of South African beef Figure 11: Beef exports quantities to Middle, Northern and Eastern Africa Source: Quantec EasyData Congo Egypt Ethiopia Gabon Kenya Uganda In Middle, Northern and Eastern Africa, Egypt commanded the highest share of beef exports from South Africa from 2009 to Congo commanded the second highest share of beef exported by South Africa from 2009 to Egypt, which is from Northern Africa, experienced a sharp increase in exports and reached its peak of 949 tons in In total Kenya, Uganda and Ethiopia, which are the Eastern Africa countries, imported the lowest quantities of South African beef during the past decade Figure 12: Beff export quantities to European Union Germany France United Kingdom Netherlands Source: Quantec EasyData 10

11 Kilograms Figure 12 above shows beef exported by South Africa to European Union from 2007 to 2016, it is clearly indicated that the Netherlands is not a regular importer of beef. However, in 2009 the country commanded 85% share of South African total beef exports and the products were mainly frozen, fresh or chilled boneless cuts. The United Kingdom (UK) and Germany were regular importers of South African beef. The UK commanded the highest share of imported beef from South Africa from in 2007 and again in 2010, 2011 and 2015 whilst Germany took a lead during 2008, 2012 and France is the lowest importer of South African beef within the EU countries. Total beef exports to the EU from South Africa have increased from 2015 to Figure 13: Beef export quantities to Western and Eastern Asia Source: Quantec EasyData UAE Bahrain China China, HK Kuwait Lebanon Qatar South African beef exports to Asia are shown in Figure 13. It is clear that the beef exports were regularly going to the United Arab Emirates (UAE), China, HK and Kuwait. The UAE was the biggest export market for South African beef from 2007 to 2008 within Asia. Kuwait have significantly increased its imports from 2013 to 2016 which made it the top importer for the past decade on average. China, HK and Bahrain experienced a decrease of exports by 40% and 89% respectively in However in 2016, China, HK increased exports whilst Bahrain has shown very little increase in exports. Qatar commanded the greatest share during 2010 while China and Lebanon are the lowest importers of South African beef. Generally, exports of beef to Asia were very minimal during 2009 to Figure 14 below shows destinations for South African beef in

12 Thousand Rand Mauritius 2% Angola 4% Qatar 2% Namibia 3% Egypt 2% Botswana China,HK 7% Lesotho 7% 1% DRC 1% Figure 14: Beef destination in 2016 Sudan 1% Swaziland 8% Kenya 1% Other 5% Jordan 10% Viet Nam 13% United Arab Emirates 11% Mozambique 11% Kuwait 11% Source: Trade Map The main destinations of South African beef in 2016 were Viet Nam which commanded 13% of South African beef during 2016, followed by Mozambique, Kuwait and UAE with 11% each, Jordan (10%), Swaziland and Lesotho with 8% and 7% respectively. Values of beef exports from various Provinces of South Africa are presented in Figure 15 below. Figure 15: Value of beef exported by Provinces Western Cape Eastern Cape Free State KwaZulu-Natal North West Gauteng Mpumalanga Limpopo Source: Quantec EasyData Figure 15 indicates that exports of beef in South Africa were mainly from Gauteng. Noteworthy is the fact that the province is one of the main exit points for exports in the country. Furthermore, most exporters of beef are 12

13 Thousand Rand Thousand Rand situated in Gauteng province and the greatest proportion of beef was exported to neighbouring countries. Mpumalanga Province was the second biggest exporter for the period under analysis followed by the Western Cape Province. North West, Eastern Cape and Limpopo Provinces have recorded irregular exports that made them to be the lowest exporters during this period. In 2014, Mpumalanga outstripped Gauteng and became the highest exporter of beef, then in 2015 and 2016 Gauteng took a lead again. The following figures (Figures 16-23) show the value of beef exports from the various district municipalities in the eight Provinces of South Africa. Northern Cape Province did not export beef during the period under analysis Figure 16: Value of beef exports from Western Cape Province City of Cape Town West Coast Cape Winelands Eden Source: Quantec EasyData In the Western Cape Province, regular exports of beef were recorded mainly in the City of Cape Town Metropolitan Municipality. The City recorded highest export values throughout the period under review with the lowest level of approximately R11.7 million in 2007 and experienced the highest value of R375 million during This is due to the fact that the City of Cape Town is the main exit point in the province. Fractional exports were also recorded from West Coast, Cape Winelands and Eden District Municipalities. City of Cape Town recorded 100% share of beef exports in 2006, 2010 and 2013, and during the rest of the years, the City accounted for more than 90% of the provincial share. Figure 17: Value of beef exported from Eastern Cape Province Cacadu , Joe Gqabi Alfred Nzo Nelson Mandela Bay , Buffalo City Source: Quantec EasyData 13

14 Thousand Rand In the Eastern Cape Province, beef exports were recorded from Buffalo City, Joe Gqabi, Alfred Nzo, Cacadu District Municipalities and Nelson Mandela Metropolitan Municipality. On average, Buffalo City is the highest exporter of beef followed Nelson Mandela Bay and Alfred Nzo District Municipality. Nelson Mandela Metropolitan Municipality recorded export values during 2007, 2009, 2015 and again in In its record, the District Municipality recorded 100% share of exports except in Joe Gqabi District Municipality recorded beef exports in 2014 and Buffalo City recorded exports from 2013 to Nelson Mandela Bay recorded 100% share of beef exports in 2007, 2009 and 2011 whilst Cacadu recorded in 2012 and Buffalo City in There were no exports records from Eastern Cape Province in 2008 and No regular exports recorded from the Eastern Cape Province from 2007 to Figure 18: Value of beef exported from Free State Province Xhariep Lejweleputswa Thabo Mofutsanyane Fezile Dabi Mangaung Source: Quantec EasyData Figure 18 indicates that exports of beef from the Free State province occurred regularly in Mangaung District Municipality. The district has exported beef worth more than R130 million which accounts for 47% of total share from 2007 to 2016 in the Free State. Followed by Thabo Mofutsanyane with exports records from 2014 to 2016 worth about R112 million and this accounted for 40.7% of total share. Lejweleputswa District Municipality recorded beef exports in 2010, 2015 and 2016 which added up to R31 million and Xhariep District Municipality recorded exports from 2012 to 2016 which were R2.6 million. Both Xhariep and Fezile Dabi have accounted for 1% share of the Free State beef exports for the entire period of analysis. Mangaung led beef exports from 2007 to 2013 with an exports share ranging from 97% to 100%. Thabo Mofutsanyane took a lead in 2014 with a share of 53% in 2015 and 52% in

15 Thousand Rand Thousand rand Figure 19: Value of beef exports from KwaZulu Natal Province Umzinyathi UMgungundlovu Uthukela ilembe ethekwini Source: Quantec EasyData In the KwaZulu Natal Province, beef exports were mainly from ethekwini Metropolitan Municipality showing increases in a fluctuation mode from 2007 until Its lowest exports value was experienced in 2007 and its peak in Umzinyathi District Municipality recorded beef export values only in Intermittent and minimal export values were recorded in UMgungundlovu, UThukela and ilembe District Municipalities during the period under review. EThekwini recorded 100% share of beef exports within the Province from 2007 to 2010 and from 2012 to On other years the District Municipality accounted for more than 90%. Source: Quantec EasyData Figure 20: Value of beef exported from North West Province Bojanala Ngaka Modiri Molema Dr Ruth Segomotsi Mompati Dr Kenneth Kaunda In North West Province, beef exports were recorded from all District Municipalities. Dr. Ruth Segomotsi Mompati District Municipality has shown regular beef exports from 2009 to 2016, Dr. Kenneth Kaunda District Municipality has recorded exports in 2013, 2015 and 2016 whilst Bojanala s record was only in 2014 and Ngaka Modiri Molema recorded in 2015 and There were no records of exports in the Province from 2007 to Dr Ruth Segomotsi Mompati District Municipality recorded highest value of exports of R 187 million in The district further accounted for a 100% share of exports from 2009 to 2012 and above 90% from 2013 to In 2016, Dr Kenneth Kaunda shot up its exports and took a lead with a share of 65% beef exports. 15

16 Thousand Rand Thousand Rands Figure 21: Value of beef exported from Gauteng Province Sedibeng West Rand Ekurhuleni City of Johannesburg City of Tshwane 751 0, Source: Quantec EasyData Figure 21 shows the value of exports by Gauteng Province from 2007 to The highest values of beef exported in Gauteng Province were mainly from City of Johannesburg Metropolitan Municipality. City of Johannesburg Metropolitan Municipality commanded the greatest shares from 2007 to Ekurhuleni, City of Johannesburg and City of Tshwane recorded regular exports of beef while Sedibeng and West Rand recorded intermittent records of beef exports. During the past decade the City of Johannesburg Metropolitan Municipality recorded the highest value of R2.1 billion followed by Ekurhuleni and City of Tshwane District Municipalities with value of R359 million and R247 million respectively. City of Johannesburg Metropolitan Municipality recorded an average exports share of 80% for the past 10 years. In 2016, City of Johannesburg recorded exports share of 55% followed by Ekurhuleni with 25% and City of Tshwane with 18%. Figure 22: Value of beef exported from Limpopo Province Vhembe Capricorn , Waterberg Source: Quantec EasyData Figure 22 shows the value of exports by Limpopo Province from 2007 to Irregular exports of beef recorded in Limpopo Province were from Vhembe, Capricorn and Waterberg District Municipalities during the period under analysis. The highest export values were recorded from Vhembe District Municipality in There were no exports of beef recorded from Limpopo province during the period from 2007 to The Waterberg district only recorded beef exports from 2014 to Vhembe district municipality accounted for 100% exports share in 2009 and 2011, Capricorn District Municipality in 2012 and 2013, lastly Waterberg in 16

17 Thousand tons Million Rands Thousand Rands On average Vhembe district municipality recorded highest exports followed by Waterberg then Capricorn for the past decade. In 2016, Vhembe shot up its exports and took a lead with a share of 62% beef exports. Figure 23: Value of beef exported from Mpumalanga Province Gert Sibande Nkangala Ehlanzeni Source: Quantec EasyData Figure 23 shows the value of exports by Mpumalanga Province from 2007 to In Mpumalanga province, Gert Sibande and Ehlanzeni District Municipalities appeared to be main exporters of beef for the past decade. Irregular exports were recorded from Nkangala District Municipality. Gert Sibande shown an immense increase of exports from 2014 to Gert Sibande, Nkangala and Ehlanzeni District Municipalities have played an important role in the exports of beef during the period under review. Gert Sibande commanded the highest market shares during the periods 2008 to 2009 and again from 2014 to Ehlanzeni District Municipality commanded the highest exports shares within the Province during, 2007 and 2010 to Imports Figure 24 below show the imports of beef from 2007 to South African beef imports have been fluctuating for the past decade. The import values and quantities of beef followed the same trend throughout the previous decade. Figure 24: Beef imports quantities and value Quantity Value Source: Quantec EasyData 17

18 Kilogram Kilograms During 2016 compared to 2007, there was an increase of 14% on imported beef quantity and beef value increased by 260% during the same period. South Africa imported approximately tons of beef in 2016 at an estimated value of R634 million. The import quantity increased by 4% in 2016 compared to Furthermore, the figure shows that it was profitable to import beef from 2007 to 2009 compared to the rest of the years as more quantities were purchased at a lower value Figure 25: Beef quantities imported from the continents Africa Americas Asia Europe Oceania Source: Quantec EasyData Figure 25 above indicates the main suppliers of beef to South Africa from 2007 to The Americas have been the main supplier from 2007 to 2009, and then Africa took a lead from 2010 to The beef quantity from America decreased from 15.7 million kilograms to 2.3 million kilogram during the past decade. Oceania has been a regular supplier of beef though it was relatively smaller quantities. There were intermittent imports of beef recorded from Asia during the period under review. Figures 26 to 28 indicate the origins of beef in Africa, America and Oceania Figure 26: Beef quantities imported from Africa Botswana Namibia Source: Quantec EasyData The beef imports from the African continent to South Africa are mainly from Botswana and Namibia. Figure 26 above clearly indicate that the imports were very low from 2007 to In 2010 the imports shot up, mainly 18

19 Tons Tons from Namibia with a share of 77% beef imports. From 2010 the Namibian beef imports were fluctuating between 10 and 12 million kilograms until South Africa imposed high standards to Namibia in 2014 hence the huge decrease of imports in 2015 and Beef imports from Botswana shown an immense increase in 2012 and then started declining until During the increase in 2012, Botswana became the highest source of beef imports and took a lead again from 2014 to In total, Namibia supplied South Africa with 66 million kilograms of beef and Botswana with 63.8 million kilograms during the entire period under analysis Figure 27: Beef quantities imported from Americas Argentina Paraguay Uruguay Brazil Source: Quantec EasyData Figure 27 shows the beef quantities imported from Americas. Paraguay commanded the greatest share during 2007 only and Uruguay was the greatest from 2008 to For the period under analysis, Uruguay have commanded 55% share of South African market, followed by Paraguay with 31%, Argentina and Brazil with 12% and 0.8% respectively. The figure clearly shows that South African beef imports from Americas are deteriorating, and in total, they have declined by 85% from 2007 to Figure 28 below present beef quantities imported from Oceania. The South African imports from Oceania continent were mainly coming from Australia and New Zealand Figure 28: Beef quantities imported from Oceania Australia New Zealand Source: Quantec EasyData 19

20 Australia is known as one of the top producers of beef in the world. Within Oceania, the country has been the main supplier of beef for South Africa during the period under analysis and it reached its peak of tons during New Zealand commanded the second highest level of beef imports from 2007 to Figure 29: Countries of origin for beef imports in 2016 New Zealand Australia 2% 3% United Kingdom 1% Others 0% Uruguay 12% Botswana 49% Namibia 33% Source: Trade map Figure 29 above shows the top suppliers of beef to South Africa during It is evident that South Africa obtains most of its beef from Botswana and Namibia, which are SACU members. Botswana commanded 49% share of South Africa s import market of beef followed by Namibia commanding up to 33%, and Uruguay with 12%. Australia, New Zealand and United Kingdom commanded 3%, 2% and 1% respectively. 20

21 3. BEEF MARKET VALUE CHAIN Beef market value chain is illustrated on Figure 30. Figure 30: South African Beef Market Value Chain 1.1 million tons Consumption Per capita consumption = 20.9 kg / year Affluent consumers (Premium beef markets) 1.2 billion kg produced 19.4 million kg imported 39 million kg exported Under Privileged Consumers Meat Processors (430 Abattoirs) Feedlot sector (65 to 70% of cattle slaughtered) Sanga types - 29% Zebu types - 11% British types - 26% European types - 27% Dairy / other - 7% Commercial Producers million cattle with potential to commercialize Local Markets Butchers - 18% Auctions - 41% Festivities - 35% Previously Disadvantaged Groups emerging farmers 3 million subsistence farmers million cattle Source: ARC, Statistics & Economic Analysis, DAFF, Easydata 21

22 It is estimated that there are approximately commercial farmers currently farming with livestock. This includes producers that keep livestock as their main enterprise and those that keep livestock as a secondary enterprise. They own around 13.3 million cattle. There are small-scale farmers and 3 million subsistence farmers that own around 5.69 million cattle. The beef supply chain has become increasingly vertically integrated. This integration is mainly fuelled by the feedlot industry where most of the large feedlots own their own abattoirs, or at least have some business interest in certain abattoirs. In addition, some feedlots have integrated further down the value chain and sell directly to consumers through their own retail outlets. Some abattoirs have also started to integrate vertically towards the wholesale level. Under the previous marketing regime, wholesalers mostly bought carcasses through the auction system. Currently, many wholesalers source live slaughter animals (not weaners) directly from farmers or feedlots on a bid and offer basis, i.e. they take ownership of the animal before the animal is slaughtered. The animal is then slaughtered at an abattoir of the wholesaler s choice, where after the carcass is distributed to retailers. In some instances, the public can also buy carcasses directly from wholesalers. The abattoir industry has expanded tremendously in number and in capacity. In this regard, it is important to note that this industry can be divided into those abattoirs that (i) are linked to the feedlot sector and the wholesale sector, or are owned by municipalities and (ii) those that are mainly owned by farmers and SMME s. The former abattoirs are mainly class A and B abattoirs, whereas the latter are usually classified as C, D and E class abattoirs. The beef industry produces around 1.1 million tons of meat and imports around 19.4 million kilograms while exporting 39 million kilograms. Per capita consumption is around 20.9 kg and number of consumers is around 55 million. Table 10 below shows the industry role players. 22

23 Table 1: Industry role players No. Name Description Contact Details 1 AUSTIN EVANS FEEDLOT Feedlot P O Box 397, Somerset East, 5850 T : (042) F : (042) ADAM AGRI Feedlot PO Box 75, Colesberg, 9795 T: (051) F: (051) BEEFCOR It is situated east of Pretoria. It owns and operates the Bayview Feedlot, Boskop Ranch and Beefcor Wholesale. The feedlot carries head and markets between and head annually, most of which are distributed in Gauteng. The company also has a 20% share in Hidskin Processors and a 25% share in Chamdor Abattoir. 4 BEEFMASTER It is a private, family owned business situated 10 km from Christiana, in the North-West province. The feedlot carry around cattle standing at any given time. It currently supplies approximately 10% of the country s beef and with its geographic position delivers to all nine provinces within 24 hours. 5 Bull Brand It is owned by Bull Brand - integrated Meat Company situated in Krugersdorp. It has fresh meat production process-abattoir, deboning, added value department and canning. They own two feedlots in Potchefstroom and Magaliesberg and they both carry heads of cattle at any point in time. 6 BRAAMS VOERKRALE BK 23 P O Box 187, Bronkhorstspruit, 1020 T : (013) F : (013) P O Box 425, Christiana, 2680 T : (053) F : (053) Feedlot P O Box 158, Durbanville, 7551 T : (021) F : (021) CB FEEDLOT Feedlot P O Box 44, Reitz, 9810 T: (058) F : (058) CHALMAR BEEF It is situated in Bronkhorspruit. Its feedlot carries head of cattle standing at any given time. When the new abattoir and de-boning facility opened for business in 2003, Chalmar beef became fully integrated. P O Box , Wingate Park, 0153 T : (011) F : (011) D C LOUW FEEDLOT Feedlot P O Box 56, Adelaide, 5760 T : (046) F : (046) DOORNBULT VOERKRALE (Pty) Ltd Feedlot P O Box 13, Ladanna, 0704 T : (015)

24 No. Name Description Contact Details 11 EAC Group Started by Claassen 40 years back. In 1986, joined the force with two shareholders and started Midland meat factory. They have distribution network in Kwazulu Natal. Four modern abattoirs operate from Wolwehoek, Harrismith, Vereeniging and Frankfort. All three feedlots are situated in the calf weaner and lamb weaner producing areas and they carry cattle at any specific time. The feedlots thus form an ideal marketing channel for weaner producers. 12 FORTRESS BONSMARAS It is situated 12 km north-west of Frankfort, Free State. It is a beautiful farm (2.925 ha) and the capacity of the feedlot is about 6000 weaners of Bonsmara or Bonsmara-cross per annum. 13 KAMEELDRIFT Feedlot VOERKRAAL 24 F : (015) P O Box 630, Frankfort, 9830 T : (011) F : (011) F : PO Box 15648, Kameeldrift Oos T: F: KANHYM ESTATES LTD. Feedlot P O Box 89, Middelburg, 1050 T : (013) /3 F : (013) Karan Beef It is a family business situated at Heidelberg, south of Johannesburg. It operates feedlot, feed mill, abattoir and meat processing. The feedlot accommodates over head of cattle - making the Karan Beef feedlot the largest in Africa. The abattoir has the capacity to process up to head of cattle every day. PO Box 53, Heidelberg, 1438, RSA Tel: Fax: feedlot@karanbeef.com 16 KELLERMAN BOERDERY Feedlot P O Box 74,Koringberg,7312 T : F: (021) KLEYNFAAN FEEDLOT Feedlot P O Box 169, Vryheid, 3100 T : (034) F : KOODOOLAKE Feedlot P O Box 275, Stella, 8650 T : F : KOREM FARM Feedlot PO Box 58893, Karenpark, 0118 T : F : LIEBENBERGSTROOM Feedlot P O Box 130, Edenville, 9535

25 No. Name Description Contact Details VOERKRAAL BPK T : (056) F : (056) MANJOH RANCH Feedlot P O Box 1052, Nigel, 1490 T : (011) F : (011) /3/4 F : (011) MADIKOR Feedlot P O Box 1050,Louis Trichardt,0920 T : (015) F : (015) / MIKRON BOERDERY Feedlot PO Box 357, Bultfontein, 9670 T: F: MLEKI`S BEEF Feedlot Postnet Suite 327, Private Bag x 2020 Isando, 1600 T: F: C: MUSHLENDOW Feedlot P O Box 357, Koster, 0348 T : (014) F : (014) MVB FEEDERS Feedlot P O Box 848, Louis Trichardt, 0920 T : (015) F : (015) PIET WARREN PLASE Feedlot P O Box 1, Gravelotte, 0895 T : (015) F : (015) POPPIELAND TRUST Feedlot P O Box 9, Bultfontein, 9670 T : (051) F : (051) RANCH ESTATES Feedlot P O Box 1270, Delmas, 2210 T : (013) F : (013) R : (011) SIS FARMING Is located in the Bethal/Ermelo region of the Mpumalanga escarpment. It purchases weaners from other farmers to fatten for subsequent sale and 25 P O Box 201, Bethal, 2310 T (013)

26 No. Name Description Contact Details delivery to the Witbank Abattoir. It has cattle standing at any given time. F : (013) SKS BOERDERY Feedlot P O Box 348, Middelburg, 1050 T : (013) F : (013) SPARTA BEEF It is a family-owned and operated cattle feedlot and farming concern. The feedlot has around cattle standing at any time. The present operation was established on the farm "Sparta", a sub-division of the farm "Middel " in the Marquard district, during the 1960's. The farm "Middel", has been in the family for over 100 years and since inception, farmed as a family business. Originally mixed farming - cattle, sheep, pigs, plus various crops, such as maize (corn), wheat, oats and potatoes - was practiced on the farm. Sparta Beef expanded its horizons by entering into a joint venture where it tans cattle hides in Butterworth, Eastern Cape. Later, in January 1999, it acquired a large abattoir in Welkom, Northern Free State, with Black Empowerment and other local business interests now known as Sparta Foods (Pty) Ltd. At the beginning of 2001, it started a wholesale department called Sparta Foods in Benoni (Gauteng). 33 TAAIBOSCHBULT Pty Ltd 26 P O Box 64, Marquard, 9610 T : (051) F : (051) R : (051) Owned by Bull Brand P O Box 2092, Potchefstroom, 2520 T : (018) F : (018) THERON BOERDERY Feedlot Elsonstraat 84, Pretoriawes, 0183 T : (012) F : (012) TRIPLE C FEEDLOT feedlot P O Box 1723, Dundee, 3000 T: (034) F: (034) C: VENCOR Feedlot P O Box 749, Ladanna, 0704 T : (015) F : (015) C : VERCUIEL Feedlot PO Box 245,Stella,8650 T: F: WINDHOEK Feedlot PO Box 387,Pietersburg,0700

27 No. Name Description Contact Details BOERDERY T: F: Feedlot 39 VERGEZIGHT FEEDLOT Source: SA feedlot Association. PO Box 1034, Heilbron,9650 T: /2/3 F:

28 4. MARKET INTELLIGENCE Export tariffs. Tariffs that different importing countries applied to beef originating from South Africa in 2015 and 2016 are shown in Tables 2 and 3. Table 2: Export tariffs of beef (fresh or chilled) Country Product Code Trade Regime Descriptio n United Arab ; Emirates and & Jordan Mozambique ; & Swaziland, Lesotho and Namibia China, Hong Kong Source: Market Access Map ; & ; Applie d Tariffs Total Ad Applied Total valorem Tariffs Equivalent Tariff (estimated) Ad valorem Equivalent Tariff (estimated ) MFN duties Applied 0% 0% 0% 0% Preferential tariff for South Africa 15% 15% 0% 0% Intra SACU rate 0% 0% 0% 0% MFN duties Applied 0% 0% 0% 0% Table 2 indicates that during 2015 and 2016 United Arab Emirates and Jordan applied MFN duties of 0% exports of fresh or chilled beef. Mozambique applied preferential tariff for South Africa 15% in 2015 and 0% in Swaziland, Lesotho and Namibia applied a 0% Intra SACU rate to beef originating from South Africa during 2015 and Table 3: Export tariffs of frozen beef Country Product Code Trade Regime Descript ion Angola ; & Viet Nam ; & China, HK ; ; & MFN duties Applied MFN duties Applied MFN duties Applied Applie Total Ad Applied Tariffs Total Ad valorem d valorem Equivalent Tariff Tariffs Equivalent Tariff (estimated) (estimated) 10% 10% 10% 10% 20% 20% 20% 20% 0% 0% 0% 0% 28

29 Country Product Code Trade Regime Descript ion Applie d Tariffs Total Ad Applied Tariffs Total Ad valorem valorem Equivalent Tariff Equivalent (estimated) Tariff (estimated) Kuwait Mozambi que ; & Source: Market Access Map MFN duties Applied Preferent ial tariff for South Africa 5% 5% 5% 5% 15% 15% 0% 0% Table 3 above shows that Viet Nam applied the highest tariff rate of 20% on frozen beef to South Africa followed by Mozambique with a preferential tariff rate of 15% only in 2015, Angola and Kuwait with 10% and 5% respectively during the period 2015 and China, Hong Kong applied MNF of 0%. Most of the tariffs applied to South African frozen beef remained the same during the periods 2015 and 2016 except Mozambique Import tariffs Tables 4 below shows the import tariffs of beef, fresh or chilled during 2015 and Botswana and Namibia received an Intra SACU tariff rate of 0% for the past two years when exporting fresh or chilled beef carcasses and half carcasses to South Africa. South Africa also applies a preferential tariff rate of 0% to SADC. Table 4: Import tariffs of beef, fresh or chilled Country Product Code Namibia and Botswana ; & Source: Market Access Map Trade Regime Applied Total Ad Applied Total Ad Description Tariffs valorem Equivalent Tariff Tariffs valorem Equivalent Tariff (estimated) (estimated) Intra SACU 0% 0% 0% 0% Table 5: Import tariffs of beef, frozen Country Product Code Trade Regime Description Applied Total Tariffs Applied Tariffs Total Ad valorem Equivalent Tariff (estimated) Ad valorem Equivalent Tariff (estimated) 29

30 Country Australia and Uruguay Product Code & Trade Regime Description MFN duties Applied MFN duties Applied Applied Total Tariffs Applied Tariffs Total Ad valorem Equivalent Tariff (estimated) 40.00% or $/Ton whichever is the greater 40.00% or $/Ton whichever is the greater OTQR: 40% ITQR: 13.8 OQTR: 40.00% IQTR : 32.00% OQTR: 40% or $/Ton whichever is the greater IQTR : 13.80% OQTR: 40% or $/Ton whichever the greater IQTR : 32% is Ad valorem Equivalent Tariff (estimated) OTQR: 40% ITQR: 13.8 OTQR: 40% ITQR: 32% Botswana and Namibia ; & Source: Market Access Map Intra SACU 0% 0% 0% 0% Table 5 above shows the import tariffs applied by South Africa to the exporting countries of frozen beef. Australia and Uruguay receive the applied tariff of 40% or $/ton whichever is the greater during 2015 and 40% or $/Ton whichever is the greater during Botswana and Namibia received 0% Intra SACU rate when exporting frozen beef carcasses and half carcasses to South Africa in 2015 and

31 5. PERFORMANCE OF SOUTH AFRICAN BEEF INDUSTRY IN Exports. Table 6: List of importing markets for Beef (fresh or chilled) exported by South Africa in 2016 South Africa s export represents 0.3% of world export for the Beef (fresh or chilled); its ranking in world exports is 24. Trade Indicators Importers Value exported in 2016 (USD thousand) Trade balance 2016 (USD thousand) Share in South Africa's exports (%) Quantity exported in 2016 Quantity unit Unit value (USD/unit) Growth in exported value between (%, p.a.) Growth in exported quantity between (%, p.a.) Growth in exported value between (%, p.a.) Ranking of partner countries in world imports Share of partner countries in world imports (%) Total imports growth in value of partner countries between (%, p.a.) Average tariff (estimated) faced by South Africa (%) World Tons Jordan Tons United Arab Emirates Tons Kuwait Tons Mozambique Tons Swaziland Tons Namibia Tons Lesotho Tons Mauritius Tons Angola Tons Qatar Tons Source: ITC calculations based on COMTRADE statistics. 31

32 Table 6 shows that during 2016 South Africa exported a total of tons of beef (fresh or chilled) at an average value of US$ 3 457/unit. The major export destinations for beef (fresh or chilled) originating from South Africa during 2016 were Jordan, United Arab Emirates (UAE), Kuwait, Mozambique and Swaziland. On average, during the period 2012 and 2016 South Africa s exports for beef (fresh or chilled) increased by 23% in value and increase by 16% in quantity. At the same period, UAE experienced an increase of 823% in value and 498% in quantity per annum and Kuwait increased by 148% in value and 215% in quantity South Africa s exports for beef (fresh or chilled) to the world increased by 19% during the period between 2015 and At the same period Jordan and UAE increased by 3% and 61% respectively whilst Kuwait decreased by 4%. 32

33 Figure 31: Growth in demand for fresh beef exported from South Africa in 2016 Source: Trademap, ITC 33

34 Figure 31 illustrates that between 2012 and 2016, South Africa s beef (fresh or chilled) exports to Mozambique, Mauritius, Egypt, Gabon, Swaziland and Lesotho were growing at a rate that is less than their import growth from the rest of the world. South Africa s beef (fresh or chilled) exports to Kuwait, UAE, Qatar, Hong Kong China, Bahrain, Namibia, and Angola were growing at a rate that is greater than their imports from the rest of the world during the periods 2012 and United Arab Emirates is the biggest export market for beef with South African exports growth to United Arab Emirates of 823%. The most growing demand of South African fresh or chilled beef is in United Arab Emirates and Kuwait with an annual growth of South African import of 10% and 14% respectively. 34

35 Figure 32: Prospects for market diversification for fresh beef exported by South Africa in 2016 Source: Trademap, ITC 35

36 Figure 32 above indicates that South Africa s fresh or chilled beef has been mainly exported to Jordan with a share of 20.97% of SA s beef exports during If South Africa wishes to diversify its exports of fresh or chilled beef exports, the biggest market exist in Egypt with a world share of 0.02 % and annual import of 81% per annum. Currently South Africa s export of beef to Egypt has a market share of 1.35 %. Although this is the biggest market, South Africa might not penetrate the market easily. The fastest growing market of beef imports exist in Namibia at a rate of 58%. This market is the most lucrative market for South Africa, although it is a small market with the world share of 0.01%, South Africa might penetrate it easily because South Africa s annual export growth to Namibia is 3.81%. 36

37 Table 7: List of importing markets for the Beef (frozen) exported by South Africa in South Africa s export represents 0.3% of world export for frozen beef; its ranking in world exports is 24. Trade Indicators Importers Value exported in 2016 (USD thousand) Trade balance 2016 (USD thousand) Share in South Africa's exports (%) Quantity exported in 2016 Quantity unit Unit value (USD/unit) Growth in exported value between (%, p.a.) Growth in exported quantity between (%, p.a.) Growth in exported value between (%, p.a.) Ranking of partner countries in world imports Share of partner countries in world imports (%) Total imports growth in value of partner countries between (%, p.a.) Average tariff (estimated) faced by South Africa (%) World Tons Viet Nam Tons Hong Kong, China Tons Kuwait Tons Angola Tons Mozambique Tons Egypt Tons Mauritius Tons Lesotho Tons Sudan Tons United Arab Emirates Tons Source: ITC calculations based on COMTRADE statistics. 37

38 Table 7 shows that during 2016 South Africa exported a total of tons of frozen beef at an average value of US$ 3 575/unit. The major export destinations for frozen beef originating from South Africa during 2016 were Viet Nam, Hong Kong China, Kuwait, Angola and Mozambique. Exports of frozen beef exported by South Africa to the world during the periods 2012 and 2016 experienced an increase of 45% in value and an increase of 59% in quantity. During the same periods exports to Hong Kong China increased by 176% in value and 130% in quantity. South Africa s exports of frozen beef to the world between the period 2015 and 2016 increased by 22% in value. At the same period, Viet Nam and Hong Kong China increased by 112% and 110% respectively whilst Kuwait decreased by 20% during the same periods. 38

39 Figure 33: Growth in demand for frozen beef exported from South Africa in 2016 Source: Trademap, ITC 39

40 Figure 33 illustrates that between 2012 and 2016 South Africa s frozen beef exports to Democratic Republic of Cong (DRC), Botswana, Lesotho and Mozambique were growing at a rate that is less than its import growth from the world. South African exports growth to Lesotho and Nigeria are declining at a rate of 4% and 14% respectively. During the same period, South Africa s frozen beef exports to Hong Kong China, Egypt, Qatar, UAE, Kuwait, Namibia, Angola, Congo, Mauritius and Nigeria were growing at a rate that is greater than their imports from the rest of the world. UAE experienced the highest growing demand of South African frozen beef with an annual growth of 414%. 40

41 Figure 34: Prospects for market diversification for frozen beef exported by South Africa in 2016 Source: Trademap, ITC 41

42 Figure 34 above shows the prospects for market diversification for beef (frozen) exports by South Africa in South African s frozen beef was mostly exported to Viet Nam, which commanded SA s beef exports share of 26.07%. If South Africa is to diversify its frozen beef exports, the most attractive market exists in Kenya, which experienced an annual import growth of 120%. It looks easy for South Africa to penetrate this market because it is still a small market with a world s import market share of 1.87% of South African exports. 42

43 5.2. Imports. Table 8: List of supplying markets for the beef (fresh or chilled) imported by South Africa in 2016 South Africa represents 0% of world imports for beef (fresh or chilled); its ranking in world imports is 88. Trade Indicators Exporters Value imported in 2016 (USD thousand) Trade balance 2016 (USD thousand) Share in South Africa's imports (%) Quantity imported in 2016 Quantity unit Unit value (USD/unit) Growth in imported value between (%, p.a.) Growth in imported quantity between (%, p.a.) Growth in imported value between (%, p.a.) Ranking of partner countries in world exports Share of partner countries in world exports (%) Total exports growth in value of partner countries between (%, p.a.) Average tariff (estimated) applied by South Africa (%) World Tons Namibia Tons Botswana Tons Area Nes Tons Jordan United Arab Emirates Source: ITC Trade Map. 43

44 Table 8 shows that during 2016 South Africa imported a total of tons of beef (fresh or chilled) at an average value of US$ 2 535/unit. The major suppliers of beef (fresh or chilled) imported by South Africa during 2016 were Namibia and Botswana that commanded 89.4% and 10.6% respectively. South African growth of beef imports during 2012 to 2016 decreased by 40% in value and 33% in quantity. At the same period Namibia decreased by 32% in value and 24% in quantity and Botswana also decreased by 56% in value and 49% in quantity. Between the periods 2015 and 2016 South African beef imports increased by 22% in value. Namibia increased by 79% in value whilst Botswana decreased by 67% during the same period. 44

45 Figure 35: Prospects for diversification of suppliers for fresh or chilled beef imported by South Africa in 2016 Source: Trademap, ITC 45

46 Figure 35 above shows the prospects for diversification of suppliers for fresh or chilled beef imports by South Africa in The figure above shows that Namibia commanded the greatest market share of South Africa s fresh or chilled beef imports with an annual share of 89.37% followed by Botswana by 10.6% during the year If South Africa is to diversify its imports, the most attractive supplier exists in Mauritius due to its export growth of 76%. This means South Africa can develop a new market in this country because currently South Africa does not import fresh or chilled beef from it. 46

47 Table 9: List of supplying markets for the beef (frozen); imported by South Africa in South Africa's imports represent 0.2% of world imports for beef (frozen); its ranking in world imports is 42. Trade Indicators Exporters Value imported in 2016 (USD thousand) Trade balance 2016 (USD thousand) Share in South Africa's imports (%) Quantity imported in 2016 Quantity unit Unit value (USD/unit) Growth in imported value between (%, p.a.) Growth in imported quantity between (%, p.a.) Growth in imported value between (%, p.a.) Ranking of partner countries in world exports Share of partner countries in world exports (%) Total exports growth in value of partner countries between (%, p.a.) Average tariff (estimated) applied by South Africa (%) World Tons Botswana Tons Namibia Tons Uruguay Tons Australia Tons New Zealand Tons United Kingdom Tons United States of America Tons Ireland Tons Swaziland Tons Source: ITC calculations based on COMTRADE statistics. 47

48 Table 9 shows that during 2016 South Africa imported a total of tons of frozen beef at an average value of US$2 201/unit. The major suppliers of frozen beef imported by South Africa during 2016 were Botswana, Namibia, Uruguay and Australia. The greatest share of South African frozen beef imports were from Botswana which commanded 54% during the year 2016 followed by Namibia which commanded 28.8%, Uruguay and Australia commanded a share of 11.6% and 3.2% respectively. South Africa s frozen beef imports decreased by 23% in value and 12% in quantity between the periods 2012 and During the same period, imports of frozen beef from Botswana decreased by 18% in value and 7% in quantity. South Africa s imports for frozen beef from the world increased by 43% per annum in value during 2015 and 2016 and Botswana's exports to South Africa increased by 43% in value during the same periods. 48

49 Figure 36: Competitiveness of suppliers to South Africa for frozen beef in 2016 Source: Trademap, ITC 49