By: Nghiinomenwa-vali Erastus
The sky-rocketing inflation of production costs is eroding total farm profitability as measured by the net surplus per farm per year.
As a result, it has made it less rewarding for those who are risking or have risked their capital to produce cattle/raw materials for beef production in the country.
According to the assessment done by Namibia Agricultural Union (NAU) presented in their first Second Quarter Agri-Review 2022, production costs in the livestock sector have increased significantly since June 2021 due to input price hikes.
In some cases increased by more than 50 per cent, for instance, fuel (57 per cent), while urea which is used to supplement the diet of cattle and other ruminants prices has increased by 102 per cent).
As a result, Agri-inflation, which captures the movement of agricultural inputs, climbed to record levels of 19.6 per cent, researcher Beata Xula revealed in the report.
She said this has placed a cost burden on Namibia’s livestock farming, consequently eroding total farm profitability.
Since Q2-2021, fuel costs rose by 57 per cent, animal feed went up by 29.2 per cent, animal health by 16.1 per cent, and vehicle repairs by 13.1 per cent.
The Agri-inflation inevitably climbed to record levels of 19.6 per cent during the same period Xulu revealed.
She has also presented a gloomy short-term outlook for the farmers regarding price stabilisation or slowing down.
“No price stabilisation is anticipated in the next quarter, seeing that prices of key production inputs (fuel and feed) are showing an upward trend,” wrote the Xulu.
According to NAU observation, urea prices have remained raised since the Covid-19 period and have been sustained at high levels by the disruption in supply due to the Russian-Ukraine conflict.
Some of the biggest producers have suspended exports until the end of May 2022, as the impact gets to be observed in the year-on-year price surge locally and in South Africa.
Prices spiked by more than 100 per cent (by 102 per cent in Namibia and 125 per cent in RSA).
Xulu stated that the market remains volatile, and local prices already indicate an upward trend for the next quarter.
As for phosphate, the year-on-year local price of P12 increased by more than 50 per cent (N$9.28/kg in 2021 and N$14.63/kg in 2022).
Yellow maise, which is also critical in animal feed, year-on-year prices rose by 34.2 per cent in South Africa (N$3.40/kg in Q2-2021 and N$4.50/kg in Q2-2022).
In Namibia, the price increased by 27.5 per cent for the same period (N$4.87/kg in 2021 and N$6.21/kg in 2022).
Xulu explained that the surge in the prices of the above inputs explains the increase in feed costs which is reflected in the NAU production cost index.
MARKET TRENDS and SA CATTLE MOVEMENT BAN
The number of marketed cattle grew by 20.3 per cent in the first half of 2022 compared to last year’s period.
Live export numbers increased by 16.6 per cent, while export abattoirs’ throughput grew by 60.4 per cent.
B&C class abattoirs’ throughput dropped by 19.9 per cent. Fewer cattle (88 128) were auctioned during 2022 (Jan-Jun) compared to last year during the same period (91 302), showing a decrease of 3.5 per cent.
Year-to-date beef exports had accumulated to 6 624 tons by the end of July 2022, which is 92.99 per cent higher than the 3,432 tons registered from January to July 2021.
While July’s data shows a reasonably good start to 3Q2022, with an 11.24 per cent increase in live export for July 2022, the outlook is rather bleak with the recent foot and mouth disease outbreak leading to a ban on the movement of cattle in South Africa.
According to Simonis Storm analysis, the Meat Board expects the 21-day movement ban to result in lower marketing activity during August 2022 and is highly likely to impact on September 2022 as well, leading to weaker performance in 3Q2022.
According to Meat Board analysis, as a peak period of orders of weaners for the festive season, the restriction on live exports occasioned by the FMD situation in South Africa is likely to reverse the growth that was expected in 2022.
Local weaner and lamb production systems rely highly on the South African market, and the current outbreak of the foot-and-mouth disease in South Africa adds serious risk to these production systems.
The ban will also put more pressure on weaner prices locally, which have been declining already.
The live weaner price was at its lowest level of N$34.18/kg in July 2022, 7.48 per cent lower than N$36.94/kg observed in the same month last year.
South Africa and Namibia battle FMD breakouts almost every year. Even though various veterinary measures are in place, they seem inadequate given the circumstances of grazing and wild animals. Email: firstname.lastname@example.org