Meat dumped in SA

Cape Town - Part of a consignment of 200 000 tons of meat, ostensibly from South America, is possibly being sent to South African ports "to get rid of it".

According to Johan Willemse, agri-economist at the University of the Free State, this meat certainly comes from Brazil and Argentina, and had been destined for Russia, the world's largest meat importer. But that country apparently has no money to pay for it, says Willemse.

This is because the global economic recession has exerted pressure on the price of energy, one of Russia's major foreign-exchange earners.

He says the price of all agricultural products will probably decline further this year and remain under pressure, while South Africa's open policy on trade could offer opportunities for other countries looking for somewhere to dump their wares.

Sake24.com was unable to get confirmation from the meat industry that the Russian meat was on the way.

Alwyn Kraamwinkel, chief executive of the SA Milk Processors Organisation (Sampro), says the prices of dairy products, like those of other commodities, are still falling globally.

"Domestic produce can expect steep competition from imported products this year," he says.

This could have a negative effect on South Africa's dairy exports, which rose by 118% last year, the most since 2002.

Willemse says the scarcity of money or credit - since banks are risk-averse - will have an enormous impact on agriculture. If import costs climb 30% to 40%, credit would need to rise by the same amount.

The downturn in consumer expenditure will also have an impact on farmers. "Less money means people will eat less steak and more pizza," he points out. He says there is a 90% correlation between the price of beef and economic growth.

Agribusinesses now need to manage their cash flow wisely, reschedule debt and hold on until 2010, he said.

- Sake24.com

For more business news in Afrikaans, go to Sake24.com.