Consumers face an expensive braai season this year as they entered the December festive with meat inflation at the highest level for this period since November 2017 when it reached 14.9% year-on-year (y/y), says FNB Agri-Business senior agricultural economist Paul Makube.
He said that what underpinned the current strength in meat prices was a combination of factors at play, including the tight supplies due to the pedestrian livestock slaughter, reduced imports of chicken amid higher prices, and surprisingly resilient consumer demand despite tough economic conditions.
In addition, he said livestock producers faced enormous cost pressures emanating from a surge in raw feed input prices that necessitated the cost recovery as profit margins were severely squeezed.
Makube said the price of maize, a major ingredient in feed manufacturing, has so far increased by 43% and 28% year-on-year for the white and the yellow maize respectively, to an average of R4 989/ton and R4 837/ton.
The price of soybeans, a major source of plant protein in livestock feed, so far averaged R10 561/ton, which is 39% higher year-on-year.
South Africa’s November 2022 consumer price inflation (CPI) surprised on the downside at 7.4% year-on-year from 7.6% September, but was still off this year’s peak of 7.8% y/y reached during July, according to recent data from Statistics SA (Stats SA).
The monthly CPI slowed by 0.3% month-on-month in November from 0.4% the previous month.
After steadying in October, food CPI rebounded by 0.5 percentage points in November to 12.8% year-on-year and still the highest level since April 2009.
In contrast, global food price inflation as measured by the UN Food and Agriculture Organization (FAO) slowed significantly from the 2022 high of 34% y/y in March to just 0.3% y/y in November 2022 with the monthly prices remaining in negative territory for the past eight consecutive months at -0.1% month-on-month.
Prices were down across the cereals, dairy, and meat categories, which more than offset gains in the vegetable oils and sugar categories.
Within SA’s food CPI sub-index, the November meat CPI steadied but still reached the highest level in 14 months at 10.5% year-on-year.
A deep dive into the meat CPI data shows that beef T-bone steak surged by 18% y/y at R135.48/kg, followed by brisket and chuck with increases of 11.8% and 10.4% respectively y/y.
In the pork category, pork ribs and fillet posted modest gains of 3.9% and 2.8% y/y at R94.59/kg and R104.62/kg.
However, pork chops fell by 3.8% y/y at R89.55/kg. Lamb chops rose by 4.8% y/y to R195.55/kg.
For chicken, prices were up across most categories with an increase of 7.2% at R63.85/kg for fresh whole birds while the individually quick frozen (IQF) 2kg chicken portions rose by 5.1% y/y at R86.69.
Nonetheless, Makube said they expected some reprieve for consumers early in the new year as the lower seasonal demand after the December holidays in a tight economic environment, with costs of electricity and transport still elevated, likely to place downward pressure on meat prices.
BUSINESS REPORT