What are risks to feed prices for the South African livestock and poultry industries?

AGRIBUSINESS PERSPECTIVE

-  Wandile Sihlobo

The livestock and poultry industry has had a difficult past few years. A variety of external shocks made for a challenging operating environment for many farmers and agribusinesses. These shocks included animal diseases and rising input costs, such as yellow maize and soya bean prices.

While the spread of diseases may be slowing, and organised agriculture and government continue to collaborate to address biosecurity risks, concerns about renewed increases in animal feed prices persist. This is particularly the case in the expected El Niño period, which might result in a lower harvest compared with recent seasons of bumper crops.

The livestock and poultry sector hardly enjoyed the gains of a large domestic harvest of the past two seasons because this did not bring any meaningful reduction in feed prices. For example, since December 2020, yellow maize prices have broadly traded over R3 000/t, while soya bean has generally been over R5 000/t. This has been a different experience compared with prior seasons where large harvests led to a decline to much lower feed prices than we observed in the past two years.

The major reasons for this were higher global maize and soya bean prices on the back of drought in South America, rising demand in China, COVID-19 related supply chain disruptions, and the Russia-Ukraine war.