Livestock sector fights to survive another drought
Despite a brief period of recovery in 2022, the Namibian livestock and meat industry is trying its best to survive yet another drought.This is according to Ace Mutelo, manager of information systems at the Meat Board of Namibia.
Mutelo said that the Ukraine war and the ongoing drought are immediate challenges that all stakeholders must factor into their planning.
He said the industry did not fully recover from a sharp decline in animal marketing experienced in 2020 and 2021 due to the prolonged drought between 2013 and 2019.
He said output in the cattle sector declined by half in 2020, leading to reduced exports.
“The trend continued well into 2021. During this time, Covid-19 placed further pressure on retail prices in major export destinations due to the closure of restaurants, reduced demand for highly-priced prime cuts and disposable income – each factor reinforcing the other.”
He added that after two years of herd rebuilding, 2022 posted a positive performance compared to 2021.
Demand and supply factors
Mutelo explained that global protein demand is on the rise while production has been hampered by the devastating outbreak of African swine fever in 2018.
“The mismatch in global meat demand and supply resulted in a price boom in the meat industry, which continued well into 2023, when protein supply was expected to recover.
According to Mutelo, current international prices are high for most agricultural commodities due to the recovery in demand following the outbreak of Covid-19 and the resulting supply and trade disruptions exacerbated by the war between Russia and Ukraine.
He said global beef demand remains strong with consumption growth of 1%, reflected by sustained high prices given the ongoing tight supply. In many countries, demand was supported by a recovery in tourism and food service activities.
Growth overview
He emphasised that sub-Saharan Africa’s (SSA) human population is expected to rise by over a billion by 2050, a higher growth rate than any other continent in the world.
“This means that in those SSA countries where economies will grow and consumer incomes will rise strongly in the next twenty to thirty years, demand for meat will likely increase significantly.”
Between 2021 and 2022, beef production in SSA grew by 1.7% per annum, Mutelo said.
He added that in 2022, Namibia produced just over 25 000 tonnes of beef, of which 10 631 were exported to various destinations, including the European Union, Norway and China.
Namibian developments
After persistent increases in fuel prices brought about by geo-political tensions, first-quarter agri-inflation, as reported by the Namibia Agricultural Union, slowed down from 15% observed last year to 8.7%.
Mutelo said due to weaker demand in South Africa, Namibian weaner prices have been on a downward spiral, forcing livestock producers to sell livestock at low prices.
“Unprofitable weaner farming will result in herd liquidation, with serious implications for the replenishment rate going forward.”
He said abattoirs, supported by high international retail prices, have managed to keep the all-grade average beef carcass price at N$60 per kg. This has supported slaughter-ox farmers and ensured throughput for local slaughter facilities at the same time. However, international beef prices can still support a higher producer price.
According to him, a slowdown of the Chinese market due to falling prices is likely to affect international retail prices negatively and trickle down to Namibian beef prices in the coming months, depending on outcomes in international markets.
Namibian retail carcass prices have remained just below the N$100 per kg mark.
However, expected fuel prices are likely to reverse recent positive effects on the cost of inputs for agricultural enterprises, including livestock farming.