{"id":718238,"date":"2023-09-13T13:33:20","date_gmt":"2023-09-13T11:33:20","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=718238"},"modified":"2023-09-13T13:35:53","modified_gmt":"2023-09-13T11:35:53","slug":"bad-news-for-braai-lovers-in-south-africa-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/lifestyle\/718238\/bad-news-for-braai-lovers-in-south-africa-2\/","title":{"rendered":"Bad news for braai lovers in South Africa"},"content":{"rendered":"\n

While meat prices in South Africa are slowly decreasing, an in-depth dive into the value chain around beef pricing by the Competition Commission shows that retailers are taking advantage of demand.<\/p>\n\n\n\n

According to the commission’s latest Essential Food Pricing Monitoring (EFPM) Report, the production costs of beef in South Africa have been coming down since September 2022. However, retail prices for beef cuts have increased.<\/p>\n\n\n\n

“It is evident that the increase in retail prices at this time was not due to pressure from farmers, feedlots or abattoirs,” the commission said. “Rather, this is due to retailers applying more margin to meat than they did before<\/strong>.”<\/p>\n\n\n\n

The commission said that these margins have been sustained since the retailers’ share of the final price remains higher than the entire period under review, even as retail prices fall. <\/p>\n\n\n\n

“Clearly, lower producer prices are not being fully transmitted to consumers<\/strong>. This may be the combination of lag effects between when retailers pay for the meat and when it is sold; and attempts to maintain profits in the face of higher costs from elsewhere, such as fuel prices and load shedding.”<\/p>\n\n\n\n

The Competition Commission said that in the six months from January to June 2023, the price of weaning calves fell by 21%, going from R37.48 per kg to R29.61 per kg. <\/p>\n\n\n\n

This steep decline has been attributed to low carcass prices and higher carcass supply. <\/p>\n\n\n\n

While this may be positive for ultimate consumer prices, producers note that it is not feasible for them to sell weaner calves below R30.00 per kg, largely due to the rising feed costs for cattle.<\/p>\n\n\n\n

However, even with this threshold, the price of producing meat cuts has dropped significantly.<\/p>\n\n\n\n

Meanwhile, price data tracked by Stats SA shows that meat prices – while quite volatile and fluctuating month-to-moth – have trended upwards.<\/p>\n\n\n

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This divergence has resulted in growing retail margins in 2023, with the retail spread in June 2023 at its widest level since 2021, the commission said.<\/p>\n\n\n\n

“The degree of this divergence is shown by the fact that wider spread has been sustained even as retail prices of beef have started to come down.”<\/p>\n\n\n\n

This again reflects the “rocket and feather” trend of food pricing in South Africa, where retailers are quick to hike shelf prices when costs shoot up – but take much, much longer to bring them down again when market conditions turn.<\/p>\n\n\n\n

Short-term data<\/strong><\/p>\n\n\n\n

There may be a glimmer of hope for meat lovers ahead, however.<\/p>\n\n\n\n

According to analysis from the Bureau for Food and Agricultural Policy (BFAP), meat prices are coming down.<\/p>\n\n\n\n

Weaner calf prices were up month on month (11%) in July 2023, following a persistent decline over the first half of 2023, reflecting growing demand for meat.<\/p>\n\n\n\n

Cattle and sheep slaughters increased by 2% and 9%, respectively, in June, suggesting that feedlots
are increasing placements, prompting the increased demand for weaners.<\/p>\n\n\n\n

At the same time, the price of both beef and sheep meat dropped by 15% y-o-y<\/strong>.<\/p>\n\n\n\n

The BFAP offered an alternative explanation for the more recent trend on pricing, noting that it reflects constraints in consumer spending power.<\/p>\n\n\n\n

While more expensive cuts have seen a more dramatic short-term decline, the price declines of the more affordable meat types, poultry and pork were more modest at 1% and 0.2%, respectively, it said.<\/p>\n\n\n\n

“With reduced intensity in load shedding, and lower meat prices, the demand for meat could increase somewhat, but consumer spending power is likely to remain strained in the near term, and therefore affordability will remain a key consideration,” it said.<\/p>\n\n\n\n

The BFAP noted that the average price of beef dropped from R60.35 per kg in Q2 2022 to R53.80 in Q2 2023 \u2013 almost 11%. <\/p>\n\n\n\n

“This represents one of the largest declines seen in beef prices over the past decade, which also speaks to the weak economic growth rate and disposable income of consumers.”<\/p>\n\n\n\n

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Read: Retailers in South Africa under fire for high food prices \u2013 load shedding is no excuse<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

An in-depth analysis of South Africa’s beef market shows that production prices have come down significantly – but prices are sticking higher as retailers cut more off the top.<\/p>\n","protected":false},"author":10,"featured_media":684937,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9876],"tags":[26],"class_list":["post-718238","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lifestyle","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/718238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=718238"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/718238\/revisions"}],"predecessor-version":[{"id":718254,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/718238\/revisions\/718254"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/684937"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=718238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=718238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=718238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}