Robust biosecurity systems, disease surveillance and coordinated response mechanisms are critically important to protect South Africa’s livestock industry against transboundary animal diseases.
This is one of the recommendations of the Spring edition of the Absa AgriTrends Report.
The recent outbreak of Foot and Mouth Disease (FMD) has raised concerns over industry growth and export potential, particularly for the beef industry. South Africa became a net beef exporter after gaining FMD-free status more than a decade ago. However, the loss of this status in 2019 due to an outbreak, followed by repeated outbreaks, has weakened export potential as each episode often triggers export bans.
Exports have served as a natural hedge against weak domestic demand due to a prolonged period of high interest rates and increased cost of living, which weighed on beef prices for multiple years. Although a stronger consumer environment was expected to support local demand in 2024, and hence strengthen beef prices, dry conditions led to higher slaughter numbers, which limited price gains. With premium boneless cuts dominating the export mix, international markets offer producers a way to optimise carcass value and manage risk.
Speaking at the official launch of the report at Nampo Cape, Nkhensani Mashimbyi, economist at Absa AgriBusiness, says the livestock sector continues to grapple with biological risks that are actively shaping industry dynamics.
“Previously, FMD-related export bans increased local supplies, which in turn pressured beef prices,” Mashimbyi said. “Recently however, dynamics have shifted. The combination of a recovering consumer climate and the FMD-induced decrease in supply led to short-term supply disruptions which presented notable price support for beef carcass. Weaner calf prices also remained firm due to effective sourcing strategies and decreased supplies, defying the usual price trend typically observed during FMD outbreaks. Additionally, good grazing conditions are likely to encourage farmers to hold back weaners for backgrounding, tightening near-term supply even further.”
While slaughter numbers are gradually recovering on the back of commendable operational responses, the industry is still far from reaching comfortable volumes.
“Vaccination and traceability efforts by the government and industry stakeholders are a step in the right direction that could pave the way for exports to China resuming. As higher-grade cuts resume their flow toward exports, this adds to domestic supply pressures, thus supporting expectations of a period of sustained high prices, with beef prices unlikely to revert to pre-FMD disruption levels over the medium term,” says Mashimbyi.
The beef industry remains of strategic importance because of its contribution to the sustainable use of grasslands, integration with the grains value chain and the role it plays in advancing inclusivity. Strengthening animal health and traceability will be essential for retaining and expanding market access, and for ensuring the economic resilience of the sector.
The full Absa AgriTrends report can be downloaded here.