BFAPAgricultural

OutlookCattlemans Conference 2015

Ferdi Meyer & Tracy Davids

How important is red meat?

0 1 2 3 4 5 6 7 8 9 10 11

-100

-80

-60

-40

-20

0

20

40

60

80

100

2005

Share of food expenditure (%)

Ne

t tr

ad

e/S

A c

on

su

mp

tio

n (

%)

0 1 2 3 4 5 6 7 8 9 10 11

-100

-80

-60

-40

-20

0

20

40

60

80

100

2010

Share of food expenditure (%)

3

2030: An optimistic view?

Inputs?

Markets?

Profitability?

BFAP: Your partner in decision-making

1990 1995 2000 2005 2010 2015 2020 20250

5000

10000

15000

20000

25000

30000

35000

40000

Real Net Farm Income

?

The pendulum

Due to biological nature of production, the pendulum

effect is by far the biggest in agriculture

SOME WE CAN MEASURE ……..SOME

WE CAN’T

Overview: Domestic Drivers

• Slowing population growth rate• Continued positive but sluggish income growth• Depreciation of the Rand against the U.S.D

Driver: Population

20052006

20072008

20092010

20112012

20132014

20152016

20172018

20192020

20212022

202345

46

47

48

49

50

51

52

53

54

55

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

SA population % Growth

Mill

ions

% g

row

th

• Youth bulge population (StatsSA Census 2011 in brief)

Dynamics in the SA consumer environment:

AGE DISTRIBUTION

Overview: Real GDP per Capita

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 20240

5,000

10,000

15,000

20,000

25,000

30,000Real GDP per Capita

Baseline 2012 Baseline 2013 Baseline 2014

Dynamics in the SA consumer environment:

CLASS MOBILITY

LSM 1 LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 LSM 100

5

10

15

20

25

2004 2008/9 2013

% o

f S

A a

du

lt p

op

ula

tio

n

+25%

+69%

+99%

+82%

+68%

+22%

-85%

-21%-59%

-72%

Exchange rate forecasts

2000 2005 2010 2015 20200

200

400

600

800

1000

1200

1400

1600

Baseline 2012 Baseline 2013 Baseline 2014 Baseline 2015

…..international markets

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

20182019

20202021

20222023

20240

5000

10000

15000

20000

25000

30000

35000

40000

USA Australia Argentina Europe

Thou

sand

Hea

d

Source: OECD-FAO

Livestock numbers - Beef

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42009 2010 2011 2012 2013 2014

58,000

60,000

62,000

64,000

66,000

68,000

70,000

US Pig inventory

Source: USDA

Livestock numbers - Pigs

Livestock price outlook

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

20182019

20202021

20222023

20240

1000

2000

3000

4000

5000

6000

7000

Poultry: Brazil average producer priceUS Choice steers, 1100-1300 lb dressed weight, Nebraska.US Barrows and gilts, No. 1-3, 230-250 lb dressed weight, Iowa/South Minnesota

US

Dol

lars

per

ton

(CW

E)

Source: OECD-FAO

Maize price outlook

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

20182019

20202021

20222023

20240

50

100

150

200

250

300

Yellow maize, US No.2, fob, Gulf

US

Dol

lar p

er to

n

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

20182019

20202021

20222023

20240

5

10

15

20

25

30

35

US Beef-Maize Price Ratio RSA Beef-Maize Price Ratio

Feedlot dynamics – RSA vs. USA

Meat consumption Outlook

Beef Poultry Pork Sheep0

20000

40000

60000

80000

100000

120000

140000

160000

2001-2003 2011-2013 2023

Source: OECD-FAO

14%

China - more uncertainties

• IHS Global Insight have Chinese real GDP growing at 7% on average over the next 10 years

• From $7.5 trillion to $14.9 trillion in 2010 dollars• Say that was 8% instead, would add an additional

$260 billion• Equivalent of an Ireland or Algeria

…..what does all of this mean for our market??

Meat Consumption Growth

Beef Chicken Sheep meat Pork Eggs0

250

500

750

1000

1250

1500

1750

2000

2250

2500

2750

3000

Consumption: Avg 2001-2003 Consumption: Avg 2011-2013 Consumption: 2023

Thou

sand

tons

34%

20%

15%41%

27%

12%

81%

33%

53%-17%

January

February

March AprilMay

JuneJuly

August

September

October

November

December

300000

350000

400000

450000

500000

550000

2009 2010 2011 2012 2013 2014

Feedlot standing stock

January

February

March AprilMay

JuneJuly

August

September

October

November

December

0

50000

100000

150000

200000

250000

300000

Cattle Slaughters 2012 Cattle Slaughters 2013 Cattle Slaughters 2014

Cattle slaughters

Meat Prices (R/kg)

20022004

20062008

20102012

20142016

20182020

20220.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Beef average auction price

Chicken total realisation (Whole frozen)

Lamb avg auction price

Pork avg auction price

2002 2004

2006 2008

2010 2012

2014 2016

2018 2020

2022 0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Beef average auction price

Chicken total realisation (Whole Frozen)

Lamb avg auction price

Pork avg auction price

Nominal Real

Feedlot economics

2002 2003

2004 2005

2006 2007

2008 2009

2010 2011

2012 2013

2014 2015

2016 2017

2018 2019

2020 2021

2022 0

1000

2000

3000

4000

5000

6000

0

2

4

6

8

10

12

14

16

Beef average auction price Calf average auction price Calf:beef price ratio (right axis)

c/kg

Pric

e Ra

tio

Maize and parity

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

0

1000

2000

3000

4000

5000

6000

0

500

White maize

White maize imports White maize exports Import parity Randfontein SAFEXExport parity africa

R/t

on

Th

ou

sa

nd

to

ns

1994 1999 2004 2009 2014 20190.0

500.0

1000.0

1500.0

2000.0

2500.0

White Maize Yellow Maize Wheat Summer Wheat Winter Sunflower Soybeans Canola Bareley

SA field crops area

Canola

Sunflower

Wheat WinterWheat Summer

Soybeans

White Maize

Yellow Maize

Barley

Soybeans and parity

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

-400

-200

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

Production Domestic use Net imports Import parity - Randfontein SAFEX

Export parity - deep sea

R/t

on

Th

ou

sa

nd

to

ns

Soybean processing

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

0

200

400

600

800

1000

1200

1400

1600

1800

2000Soya bean cake

Production Domestic use Net imports Price

R/to

n

Thou

sand

tons

…..and in the long run??

Africa Total

Ang. Bots. Mal. Moz. SA Tanz. Zam. Zim.

High 161 783 65 895 0 3 445 30 858 136 29 645 28 805 2 135 Med 82 179 18 878 163 2 398 15 355 6 757 17 587 8 880 13 433 Low 54 293 8 463 4 868 823 7 088 7 685 12 420 318 12 628 Total Arable 298 250 93 235 5 030 6 665 53 300 14 578 59 653 39 003 28 195 H/ Total arable

54% 40% - 2% 19% 0.001% 18% 17% 1%

SADC Regional Potential

Africa – Growing Investment

BARD - Expanding into Africa

ZambiaRSA

MalawiTanzania

MozambiqueKenyaDRC

BotswanaZimbabweNamibiaAngolaUgandaRwanda

End!

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