Chronicle Editor
THE livestock markets have been behaving out of character in the past two weeks or so. Those who follow the beef producer prices will concur with me that the prices have been dropping instead of increasing.
The norm is that this period — that is the last quarter of the year, has the best and highest beef producer prices. In fact, if the prices were following a normal or traditional trajectory, we should be hitting peak prices mid-December, but not this year! Just so I clarify for dear readers, I am referring to producer prices not retail prices.
Producer prices are those that are offered to the farmer by the market when they sell their animals. Retail prices are those that we get when we visit meat selling outlets like butcheries. Retail prices tend to remain firm throughout the year, not responding significantly to the fluctuations in producer prices, especially a drop in prices.
This is a phenomenon which has never gotten a convincing explanation from those in the retail end of the beef value chain. It is in fact an emotive issue which can derail my submission this week, as farmers who are also consumers argue that beef retail prices tend to remain firm throughout the year, yet producer prices always drop from the beginning of each year, only to start rising somewhere mid-year.
However, this week submission is about the out of character drop of the prices during a season when we should be at the peak of producer prices. The market has already started responding to the production changes on the ground and the result is this drop we are witnessing, and my prediction is that its about to get worse before it gets better. This may sound cliché but there is no better way to describe it than that.
Most livestock farmers are now in destocking overdrive, obviously reacting to the terrible season that we are having. Animals are going in droves to the abattoirs and there is an unusual glut which naturally translates into a drop in prices as the laws of supply and demand respond accordingly.
The glut of animal supply to the abattoirs which we are experiencing now would ordinarily occur around January of every year when the market now has an abundance of well conditioned animals off the veld and farmers are off loading for school fees purposes. This time the glut shifted to the left a bit and the price drop came a bit earlier as farmers make a very delayed response to the destocking extension message.
We all knew it was going to be a bad year because Government and other development agencies have been providing early warning messaging with special emphasis on the upcoming El Nino-induced drought. However, as is always the case, farmers will wait until the very last gong or even beyond before they start acting and the result is what we are seeing now, a stampede to the market which unfortunately will always bring the prices crushing down. In fact, the wave of stampede to the market is just starting because the majority holders of the livestock cake, who are the smallholder communal farmers are only reacting now as poverty deaths have increasing in most rural areas and the reality has confirmed what was long preached, that it’s a drought year!
The next coming two weeks will see even larger numbers of poorly conditioned animals flooding the abattoirs as most farmers make a last minute rush for it! Just this past week, one abattoir operator circulated a photo of an animal which was failing to rise on its own and was lying recumbent in slaughter pens of the abattoir.
The animal had been brought by a farmer or perhaps a middle man for sell! While it is obviously very late, but it still remains the only viable advice to the livestock farmer, to say please destock and buy feed to support the remainder of your herd. This is action which if the farmer was listening and taking heed of what Government and non-government extension agencies were advising, should have taken around July or August.
Nonetheless, destocking and buying stockfeed whether in form of hay bales or commercial feeds remains the only viable option. The pain will only be that you will sell your animals on very depressed prices due to the glut which I have explained, and you will buy the stockfeed at high prices due to its increased demand at the moment. In fact, you will struggle to even get simple hay bales in the market as the demand is very high at the moment. Brace yourself dear farmer, it’s now a confirmed bumpy ride.
Uyabonga umntakaMaKhumalo.
Mhlupheki Dube is a livestock specialist and farmer. He writes in his own capacity. Feedback [email protected]/cell 0772851275.
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