During 2015/16, South Africa experienced drought, which led to the liquidation of the national flock. Good rainfall during 2016/17 boosted pasture recovery, allowing for the rebuilding of flocks. However, the local mutton market is still experiencing supply constraints.
As a considerable number of sheep were slaughtered during the drought, the local market is currently experiencing supply constraints. So far in 2018, fewer sheep have also been sent to abattoirs.
Sheep numbers are also declining due to the persistent drought in large parts of the Karoo, as well as predation and livestock theft.
As a result of the drought, the conception rate of ewes has declined from about 95% to around 70%. Production has subsequently been on the decline since 2016.
The availability of ewes of any breed is currently very limited and, if available, also very expensive. Unproductive ewes have already been sold, leading to fewer stocks on the market. Producers will likely retain ewe lambs to build their flocks, which may lead to a further decline in the slaughter rate.
Short to medium term production is therefore expected to decrease. As a result, prices are expected to remain high.
The lower maize price in 2017 led to a decline in feed costs. This, coupled with high meat prices, has resulted in greater profitability for producers.
Consumption and trade
Lamb and mutton remain the most expensive meat on the market. As such, consumer resistance to higher prices may increase price risk. South Africa is a net importer of mutton and will continue to rely on imports since the country cannot meet local demand.
Lamb and mutton prices reached a record high in 2017, and remain at high levels. Long-term trends show that lamb and mutton prices have been steadily increasing over the past decade.
The average price of feeder lambs increased by 25% from 2016 to 2017. The depleted national flock, which has led to greater retail prices, and lower feed costs have contributed to gains in the feeder lamb industry.
Producers are currently realising good returns in terms of high meat prices, as well as an increase in the wool price.
The industry is expected to continue to benefit from high meat and wool prices. Limited supply is also expected to support red meat prices. It is recommended that producers reduce their debt levels over the next two to three years while prices are still high and favourable, in order to remain in business over the long term.
Biosecurity management must be maintained in order to secure the export market for wool. Producers should also consider breeding with larger-framed animals as they are generally hardier.
Read the full article on Bizcommunity