Meat prices at abattoirs drop

THERE have been numerous producer enquiries regarding the sudden drop in the South African Red Meat Abattoir Association’s (RMAA) recent prices for A2 and A3 grade beef.

These prices have dropped below those for AB2 and AB3 grade beef.
This development has resulted from fluctuations due to exchange rates as the South African rand strengthened against international currencies.
On enquiry from Meatco, Christo Heuer from the RMAA confirmed that there has been no error in the reported prices and that the same price volatility was experienced 2008 over the Easter period.
‘Prices like now had subsequently recovered. The 23 South African abattoirs reported their prices in this period and that the volatility of A grade RSA beef carcass prices as well as lamb prices have increased significantly in recent months and this volatility can be expected to continue,’ Meatco quoted Heuer in its latest newsletter on Friday.
In the case of beef, large feedlots in South Africa play a significant role in A grade beef price movements through the impact they directly have on the market.
‘As Namibia uses the same grading system as South Africa and this system is largely aligned to our primary markets, Meatco uses the RSA prices as well as adjustments relating to other export market premiums and market incentives to set weekly prices for itself in Namibia,’ according to Meatco.
The actual pricing model Meatco uses was developed jointly with producers in 2006. Part of the Meatco pricing strategy aims to provide a reasonable amount of price stability, which Meatco managed to do so.
‘During the past two to three months, the RMAA price relationship between the various grades has changed substantially and Meatco will therefore gradually adjust its own prices to align more closely with the RMAA price relationship between grades. As the RMAA prices play an important role in the Meatco weekly price determination it is important to know how the RMAA prices are reported,’ Meatco said in its latest newsletter.
It is foreseen that Meatco will continue to pay a premium above the RSA parity prices, despite the strengthening of the rand and Namibia dollar against the euro, British pound and US dollar. Since the start of this year, Meatco has paid producers over N$180 million above the equivalent RMAA prices at South African abattoirs.
‘With the new, more focused marketing of our products through the Nature’s Reserve brands, it becomes easier to relate the final product value to the original carcass quality and Meatco will re-look at the pricing model with the goal of linking final product market returns more closely with the carcass price,’ the company stated.
This will be done within the current grading system and producers will be fully informed well in advance of any changes.