Agriculture Livestock
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Livestock Description of the Industry
Livestock farming within the Cacadu District Municipality is largely attributed to the farming of cattle, sheep and goats. South Africa has a total livestock area of approximately 590 000 km² spanning the country. Nearly 80% of the agricultural land in South Africa is suitable mainly for extensive livestock farming. The mixed veld types of the Eastern Cape present a competitive advantage for livestock activities; the province generates the greatest volume of livestock farming within the country.
Cattle are found throughout the country, however, mainly in the Eastern Cape, KwaZulu-Natal, the Free State and the North West provinces. Beef cattle farms range from fairly small (less than 20 head of cattle) to large farms and feedlots (more than 1 000). The production of weaners for the feedlot industry is the most common form of cattle farming in South Africa. Feedlots account for roughly 75 % of all beef produced in the country.
The concentration of sheep farming is located in the more arid parts of the country, where the Eastern Cape is responsible for the greatest total number of sheep in the country. Sheep flock sizes vary between less than 50 and 1800 head. The Eastern Cape dominates the total number of goats farmed in the country. Flocks of goats intended for meat production are usually smaller than sheep flocks, averaging approximately 300 head per farm. Angora goats are kept primarily for mohair production, while Boer goats are mainly for meat production.
Table 1: Cattle numbers per province
Source: Trends in the Agricultural Sector, NDA, 2009
Table 1 above indicates the number of cattle per province. Form this table one can see that although each province has experienced a drop in the number of cattle from the previous year, the Eastern Cape appears to have experienced the smallest decrease along with the Gauteng Province. In 2009, the Eastern Cape contributed 22.6% to the overall number of cattle in the country, enhancing its status as the largest livestock province. The total number of sheep in South Africa at the end of August 2009 is estimated at 24,83 million which is 1% lower than the estimated 25,08 million at the end of August 2008. In 2009, the Eastern Cape recorded the greatest total sheep numbers, making up 29,6 % of the countries sheep. A minor decrease 0,6% in the total number of goats in the country, from 6,529 million in August 2008 to 6,490 million in August 2009. The Eastern Cape is responsible for 2, 4million of these goats.
Nearly 13 million hectares or 75% of the total land area of the Eastern Cape is available for natural grazing. The major potential beef producing areas can be found in the northern parts of the Cacadu district, in Camdeboo, Blue Crane Route, Makana and Ndlambe local municipalities. Sheep and goat farming in the Karoo can be expanded through farm worker enterprises and to provide wool, mohair and meat for processing. Major parts of the Cacadu district are suitable for sheep and goat production, except close to the coastal areas.
Value Chain
Figure : The structure of the red meat supply chain
 The first step within the value chain is the breeding of the livestock, once the animal has reached its age of maturity, it is sent off to the abattoir for slaughter. After the abattoir the meat is either sent off to be exported, processed, or to the wholesaler. The skins and hides are sent to the tannery. Wholesalers deliver to the retailers where it is then purchased by the consumer.
Global and National Market Trends
The red meat industry is one of the most prominent industries in the agricultural sector, in 2008/09 the industry contributed roughly 15,5% to the gross value of agricultural production in South Africa. During this time the average producer price of beef amounted to R22,15 p/kg, this represents a 6,1% increase compared to 2007/08 when the average price amounted to R20,88 p/kg. In 2008/09 the average producer price for mutton and lamb increased by 6,5% to R31,06 p/kg, compared to R29,17 p/kg for 2007/08; while the average producer price for pork increased by 30,6%, from R14,15 p/kg in 2007/08 to R15,85 p/kg in 2008/09.
The red meat import market experienced the following trends:
§ A decrease of 17,3%, from 60 585 tons in 2007/08 to 50 123 tons in 2008/09.
§ Beef imports amounted to 7 338 tons, a decrease of 45,4% from the 13 446 tons imported during 2007/08.
§ Imports of pork increased by 1.5% with 22 661 tons 2008/09, compared to the 22 325 tons imported during 2007/08.
§ Mutton imports decreased by 18,9%, amounting to 20 124 tons in 2008/09 compared to 24 814 tons from the previous season.
The total number of cattle in South Africa at the end of August 2009 is estimated at 13,81 million, comprising various international dairy and beef cattle breeds, as well as indigenous breeds such as the Afrikaner and the Nguni. The number is approximately 0,4% lower than the estimate of 13,87 million as at the end of August 2008. The National Department of Agriculture records the total number of sheep, which include sheep from the non-commercial sector, at the end of 2008 as 24,9 million. Over the last ten years the national sheep herd of South Africa declined in total by 10,3%. The Eastern Cape is responsible for 3 million cattle, 2,4 million goats and roughly 8,5 million sheep.
Area Identified and Land Availability
The major potential beef producing areas can be found in the northern parts of the CDM, in the Camdeboo, Blue Crane Route, Makana and Ndlambe municipalities. Cattle farming could also be developed through mixed farming with game in the southern parts of the Baviaans and the northern parts of the Kou-Kamma municipalities.
Major parts of the CDM are very suitable for the production of mutton, except close to the coastal areas. The potential Boer Goat production areas are very similar to that of the potential mutton production areas.
Figure 1: Potential Beef Production Areas in CDM
Figure 2: Potential Mutton Production Areas in CDM
Figure 3: Potential Boer Goat Production Areas in CDM
Source: Cacadu District Municipality
Industry Associations
The Red Meat Producers’ Organisation (RPO) and the National Emergent Red Meat Producers’ Organisation (Nerpo) represent producers in the commercial and emerging agricultural sectors, respectively.
Land and Climatic Characteristics
As rainfall plays a major role in the availability of fodder and grazing, there is a higher potential in adequate rainfall areas.
Infrastructure
The infrastructure required to adequately cater for red meat production requires fences, dip tanks, stock water facilities, irrigation developments and mechanisation equipment. Other agricultural infrastructure needed includes focusing on land reform projects and communal farming areas.
Human Resources
On a farm size of 1000 hectares, it would take approximately 10 staff of unskilled to semi-skilled expertise in the agricultural sector to tend the animals. A mentoring programme should be entered into with already existing commercial farmers to guide the working of the farm and to teach the correct farming methods and practises to the employees.
Expected Return on Investment
In an ideal situation, a profitable farm should consist of 1000 hectares; in the case of cattle this should hold 1000 cattle, while it should take 6 times as many sheep and roughly the same for goats. The beef industry takes 1 year to realise returns, while the animal matures to slaughter age. The returns realised for 2009 are based on the size of the cattle (approximately 200-400kg) multiplied by the price per kg (R22.15 p/kg) multiplied by the number of cattle to be slaughtered. This results in approximately R4, 430, 000. However, the costs need to be realised for this. The 2005 capital costs of setting up a feedlot, abattoir and meat processing plant are presented as Annexure 1, while the enterprise budget for cattle is presented as Annexure 2.
In 2008/09 the average producer price for mutton and lamb was R31, 06 p/kg, while the average producer price for pork is R15,85 p/kg in 2008/09.
Key Constraints
§ Land in the Eastern Cape that is available to be purchased is generally characterized by a low carrying capacity; therefore, farmers will be unlikely to see profits immediately. This indicates that farmers will need large capital inputs to maintain the farm until the land is producing a profit.
§ Farming requires extensive training and skills, and many emerging farmers struggle to acquire these skills.
§ Livestock farming requires extensive capital input for fertilizer, livestock feeds, medicines and farming implements. Sourcing the funds for these inputs is extremely difficult for small emerging farmers.
§ The change in climate experienced over the last two years adversely affects the growth of this industry.
Opportunities:
§ There is potential for investment all along the value chain, in all aspects of the livestock industry
§ There is available land within the Cacadu District for livestock purposes
§ Commercial farmers are willing to provide mentoring support and assistance to new comers in the market
§ Land within CDM is the most suitable land for livestock and for each kind of livestock
Useful Contacts:
References
Cacadu District Municipality IDP, 2009/10.
National Department of Agriculture. Trends in the Agricultural Sector, 2009.
Agricultural potential of the Cacadu District Municipality, 2006
Personal Interview with Eastern Cape Department of Agriculture, 2010
Information Indemnity
§ All information contained within this profile was accurate at time of publishing.
§ The information contained within this report is intended only as an industry profile and does not assume to take the place of information contained within a business plan, pre-feasibility study or feasibility study.
§ The Cacadu District and service providers are not liable for any damages caused by the use of the information contained within this report.
§ The purpose of this profile is to both promote the area for investment and inform investors of relevant issues. It is advised that investors, who wish to pursue an investment within Cacadu DM, should use this profile as a basis to conduct further research.
Annexure 1
The following costs incurred and income received is based on a case example; which outlines the potential budget for a livestock enterprise. This functions to provide investors with broad categories of costs experienced, however further research in terms of feasibility studies and business plans will need to be carried out in order to determine the relevant costs and income according to the specific enterprise entered into.
Capital Costs
In 2005, the total costs of establishing a feedlot, feed mill, abattoir and processing plant were be in the region of R1, 423, 200.00. The physical assets and the costs for this initiative are outlined in Table 1 below:
Table 1: Costs for a feedlot, abattoir and meat processing plant
Source: Business Plan for Integrated Feedlot, 2005
Annexure 2
Enterprise Budget
In 2005 the enterprise budget for a cattle farm incurred the following:
Table 2: Enterprise Budget for Beef in CDM
Source: State of the Environment for Cacadu District Municipality, 2005
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