In a first for South Africa, the High Value Beef Partnerships (High VBP) project, in partnership with Cavalier Meats at Cullinan, has been distributing a free-range beef price list weekly, to interested farmers, by email or text message since May 2017.
The free-range beef price list is not based on South Africa’s formal carcass classification scheme, even though it uses similar classing language. For example, based on free-range beef prices, an animal classified as C class, under the current SA carcass classification scheme, could now be bought by Cavalier Meats at A class prices. The animal must be proven to have been raised under free-range conditions.
Free-range beef prices apply to animals under 3 years, at
three different carcass weight ranges.
The weight ranges are:
- Carcass weights of 180 kg to 209 kg or equivalent live weight of 360 kg to 419 kg.
- Carcass weights of 210 kg to 239 kg or equivalent live weight of 420 kg to 470 kg.
- Carcass weights of 240 kg and more or the equivalent live weights of 480 kg and over.
The liveweight assumes a dressing percentage of 50% to account for removal of the hide, offal etc.
The price list compares the three free-range targets to prices of feedlot finished class animals. Since May 2017, the best price for free-range beef has been R2,50/kg above the feedlot A2 and A3 classes; the lowest price advantage to free-range beef has been R0,50/kg. The average price advantage for the heaviest free-range carcasses (240kg+) over class A feedlot beef since the introduction of free-range beef was R1,38/kg. Lighter free-range carcasses in the 180 kg to 209 kg and the 210 kg to 239 kg groups were paid out on average R2,00/kg and R0,16/kg lower than the feedlot animals. The graph shows that heavier free-range carcasses have been paid above feedlot A2 and A3 prices since May 2017.
It is appropriate to compare free-range prices with class C prices, considering that animals targeted for free-range markets are approaching three years at slaughter. These animals would otherwise be classed as B or C, were they to be sold on conventional markets.
It is important to note that since the inception of the pricing and the free-range market, farmers have, in the worst-case and best-case scenarios with FR180 kg and FR240 kg carcasses, been paid R2,00 and R10,00/kg respectively above class C prices. On average, they have received R4,17, R6,00 and R7,54 more for light, medium and heavy carcasses respectively, than they would otherwise have received for class C carcasses.
Profit margins higher for free-range beef
In a comparison with feedlot prices, the heavier (FR210kg and FR240kg) carcasses received a best price advantage of R5,50/kg and R7,50/kg, whilst the worst-case scenario was for light (FR180kg) free-range carcasses, which received R1,00/kg less than the class AB feedlot price. On average, prices were R0,66, R2,49 and R4,03 higher for light, medium and heavy free-range carcasses than for class AB feedlot finished carcasses.
The price advantage for cattle that that may be classified as free-range relative to both class C and AB is very high (Table 1). Hence, for cattle farmers who prefer not to sell weaners, the new free-range markets have the potential to significantly improve their incomes if they can adhere to the free-range production protocol.
Table 1 Average price differences (between May 2017 and Sept 2018) comparing the three free-range beef categories and C grade carcasses
Feeding concentrates, to a maximum of 1%, is allowed in free-range beef specification
To meet free-range market specifications by 3 years, cattle must have average whole-of-life growth rates of at least 0,4 to 0,6 kg per animal per day, with best prices achieved for cattle that grow to weights of >480kg (carcass weight >240kg).
Modelling the free-range beef system
Cavalier Meats took 22 farmers who have joined the High VBP project and eight government officials to visit a commercial model farmer who delivers free-range beef. This commercial farmer joined the project at the outset of the free-range markets and conducted a parallel comparison of free-range animals and a 4 000-head feedlot enterprise. At first, the farmer finished batches of about 440 animals on the veld for the free-range market. A portion of the farm was re-structured in a wagon-wheel design, with eight camps, of about 40ha each. The wheel hub is where concentrates are fed at up to 1% of the animal weight, and water and licks are provided.
Animals targeted for free-range markets begin their finishing phase at 300 kg when they are about 16 months old. After that they are fed 1% concentrates to get to the final weight of about 500 kg in the next six months. During the finishing phase, the average daily weight gain is about 1,2 kg which takes them to heavy free-range specifications at about 20 months, when they can be marketed. A model like this allows free-range farmers with access to concentrates to use an alternative approach to finishing 300 kg animals in about 120 days. The margins shown in the free-range price lists should enable similar cost-effective growth rates, particularly in herds with larger cow herds. The margin in the free-range prices is more sustainable with a bigger cow herd than it is in a full traditional ox production system. – Baldwin Nengovhela, Heather Burrow, David Spies, Phillip Strydom and Seboke Sekgobela, DAFF
Farmers interested in testing this market should communicate with Phillip Majane of the ARC on 072 024 3193 or Majanep@arc.agric.za