The Sunday News
A DISCUSSION with players in the livestock sector, specifically the beef industry in the past week revealed that there is already a short supply of cattle in the market.
This is not a strange phenomenon, however, what seems to be a major concern to the industry giants is that this shortage came much earlier than the usual time. This has happened in the past two agricultural seasons. Traditionally the supply of cattle dwindles around August. This is the time when beef producer prices begin to rise as demand outstrips supply.
The issue of concern now among livestock industry players is to explain this change in trends and determine appropriate action in mitigating any possible negative effects that might come.
While shortage of cattle in the market may seem inconsequential to ordinary members of society it has a serious bearing on those in the industry. There are meat wholesalers who have supply contracts to meet.
These contracts are usually with big chain supermarkets, hotels and lodges and it is a nightmare to service such contracts if you are unable to predict, let alone control the input supply end of the chain. Supply trends prediction are therefore, very important for planning purposes hence the need to ask questions and find answers for any observed deviation from the norm.
My theory around this early decline in supply of cattle into the market hinges mainly on two aspects namely the good agricultural season and the liquidity crunch.
The country has had two relatively successful agricultural seasons in terms of crop production. This means the food security status of most community members has increased significantly in these two years.
Consequently one can postulate that the number of households or families that sell their livestock to buy staple food such as grain has decreased tremendously in the past two years due to improved food security status.
Secondly, the continued liquidity challenges could also be contributing to this trend in the livestock industry.
One can argue that the cash dry spell in the banking sector has completely eroded confidence in this sector such that people have now resorted to non-conventional means of banking their wealth.
Even a person who is operating a bottle store in town now banks his money by way of buying and keeping cattle and such people will not just sell unless when there is real need.
Further to the above arguments one can also argue that Matabeleland has experienced a series of droughts over the years and these have resulted in livestock losses, in some cases and forced culling as well.
The occurrence of the past two good seasons have thus given farmers an opportunity to restock and replenish what was taken out by the drought years.
With continued good harvests, we may see a continued decline in the supply of cattle for the next five years as livestock farmers rebuild their stock.
In addition to the factors that are cited above there are disease control quarantines that are effected in some districts from time to time by the Department of the Veterinary Services and these also contribute to low supply of cattle into the market.
However, the positive effect of this low supply of cattle in the market to the farmer is the inevitable increase in beef producer price. This means the price depression phase in the beef price trends will now be shorter than in most years.
Cattle prices will now begin rising as early as end of June compared to end of August in the past years. Farmers can now sell their cattle for a reasonable price from July onwards until the end of the year.
This means farmers can now have at least six months of good prices in a year!
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