In terms of tonnage of meat produced, South Africa is ranked 30th out of 149 countries, producing approximately 1212 thousand metric tons per annum (Nationmaster, 2010). Globally, meat consumption has increased from approximately 24kg per capita in 1961 to around 40kg per capita (global average, around 80kg per capita in developed nations), half of the increase is said to have occurred over the last 25 years and is expected to continue with developing nation demand expected to double over the next 30 years (Galloway et al, 2007).
Neethling (2003) identifies the primary challenges for South Africa and other developing countries as being the understanding of population growth, urbanisation and income growth in developing countries. These factors are expected to lead to a massive increase in demand. It is expected that by 2020, developing nation consumption will have increased by 100 million metric tons from the 1993 as opposed to the expected 18 million metric tons increase in developed nations.
Table 5.1 depicts the tonnage of beef, pork and sheep production, domestic use, imports, exports and average carcass price for South Africa for 2006 to 2009, and forecasts up to 2014 (RMAA, 2009).
Table 5.1 – Red meat industry basic statistics
2006 2007 2008 2009 2010 2011 2012 2013 2014
Beef Thousand tons
Production 579.7 601.7 597.8 604.5 618.4 635.3 636.0 650.5 649.0 Domestic use 636.3 658.9 654.1 655.7 664.9 677.4 677.6 689.9 689.0
Imports 66.6 66.2 59.9 55.2 52.6 48.6 48.1 46.1 46.6
Exports 10.0 9.0 3.6 3.9 6.1 6.4 6.5 6.6 6.6
c/kg
Average carcass price (c/kg) 1.923 2.090 2.150 2.329 2.531 2.617 2.766 2.854 3.016
Pork Thousand tons
Production 157.2 152.8 162.8 164.7 166.8 166.9 167.5 167.1 167.4 Domestic use 177.8 173.3 179.2 172.1 174.2 174.0 174.6 174.5 175.2
Imports 20.5 23.2 18.9 11.3 11.2 11.0 11.0 11.2 11.5
Exports 0.0 2.7 2.6 3.8 3.8 3.9 3.9 3.8 3.7
c/kg
Average carcass price (c/kg) 1.214 1.415 1.605 1.626 1.751 1.849 1.972 2.054 2.200
Sheep Thousand tons
Production 115.8 110.6 116.0 108.0 104.6 105.1 105.8 105.7 106.7 Domestic use 177.0 166.0 156.4 161.9 171.2 174.0 179.6 184.6 191.2
Net imports 54.8 52.0 37.2 53.9 66.6 68.9 73.8 78.9 84.6
c/kg
Average carcass price (c/kg) 2.709 3.020 3.250 3.547 3.650 3.922 4.192 4.456 4.754 Source: Red Meat Abattoir Association (RMAA, 2009)
In 2009, the number of cattle, pigs and sheep slaughtered in South Africa by registered abattoirs was 2 209 290, 2 241 304 and 5 049 385 respectively. The number of registered abattoirs increased from 169 in 2006 to 185 in 2009 (RMAA, 2009).
The total income generated from food and beverage sales in South Africa increased by 9.9 percent between July 2009 and July 2010. The main contributor to this increase was food sales (8.2 percent increase), driven by restaurants and coffee shops (10.2 percent increase) (Stats SA, 2010).
The year-on-year total income for the three months ended July 2010 of 9.6 percent was mainly due to an 8 percent increase in food sales, driven by restaurants and coffee shops (10.8 percent increase). Of the 9.6 percent increase, the weighted contribution of restaurants and coffee shops was 5.6 percent, takeaway and fast-food outlets contributed 2 percent, whilst caterers and other catering services contributed the remaining 2 percent (Stats SA, 2010).
The total food and beverage industry income for the three months ending July 2010 was R 9 031.9 million. The total income per enterprise type for the three months ending July 2010 was:
• Restaurants and coffee shops; R 4 712 million; • Takeaway and fast-food outlets; R 2 426.3 million; • Caterers; R 1 469.7 million; and
• Other catering services; R 423.9 million (Stats SA, 2010).
Figure 5.1 depicts the general and seasonal food sales trends. The general trend from August 2005 to June 2010 shows a steady increase, whilst seasonal increases occur around national school holidays with a noticeable increase at the end of the year, followed by a sharp decline.
Figure 5.1 – Income from food sales: Total food and beverage industry (AUG-2005 - JUN-2010 )
Source: Statistics South Africa
Figure 5.2 depicts food sales trends through restaurants and coffee shops in the food and beverage industry from August 2005 to June 2010. The same general and seasonal trends exist. The seasonal trends are more pronounced and it appears as though there was a marked overall increase in income from food sales at the end of 2007 and has remained steady since.
Figure 5.2 – Income from food sales: Restaurants and coffee shops (AUG-2005 - JUN-2010 )
Source: Statistics South Africa
In South Africa, the food price increased by 0.9 percent from April 2009 to April 2010, whilst food price inflation decreased by 0.4 percent on a monthly basis. From April 2009
to April 2010, processed food-product prices increased by 2.2 percent whilst unprocessed food-product prices decreased by 1.5 percent (NAMC, 2010).
Table 5.2 depicts South Africa’s overall and food inflation figures relative to other developed and developing countries.
Table 5.2 – Overall inflation and food inflation
Country Month Overall inflation (%) Inflation of food
and non-alcoholic beverages (%)
South Africa April 2010 4.8 0.9
Botswana April 2010 7.1 3.8 Tanzania April 2010 9.4 9.8 Zambia April 2010 9.2 7.3 Turkey April 2010 10.2 11.8 India April 2010 9.6 16.9 Brazil April 2010 5.0 5.8
United States April 2010 2.2 0.5
United Kingdom April 2010 3.7 2.9
Source: NAMC (2010)
Unprocessed meats; pork, beef, lamb and chicken prices decreased collectively by 1.36 percent year-on-year from April 2009 to April 2010, whereas the price of processed meat products increased by 4.27 percent over the same period (NAMC, 2010).
Price increases slowed at the retail level for most fresh meat categories from April 2009 to April 2010. Pork showed a price decrease for the same period. In the same period, the fresh chicken producer price decreased by 4 percent, the frozen chicken price decreased by 11.56 percent, and the porker and baconer prices decreased by 3.18 and 7.6 percent respectively (NAMC, 2010).
The producer price of beef-class A2/A3 decreased by 1.6 percent between April 2009 and April 2010 whilst the prices of beef-class B2/B3 decreased by 2.5 percent and C2/C3 increased by 0.32 percent. During the same period, lamb-class A2/A3 prices increased by 10.66 percent, B and C2/C3 prices increased by 6.7 and 11.56 percent respectively (NAMC, 2010).
The SME component of the food and beverage retail industry is approximately two thirds in terms of income (Stats SA, 2005a), whilst the SME component of wholesalers in food, beverages and tobacco is only 15 percent (Stats SA, 2005b).
The increase in income from food and beverage sales of 9.9 percent and a year-on-year overall increase in price of less than one percent indicates that the food and beverage industry is growing in South Africa.
Apart from other traditional butchers, traditional butchers compete for retail market share with convenience stores (Louw, Vermeulen, Kirsten & Madevu, 2007), speciality delicatessens (Umsombomvu Youth Fund, 2007) and informal or township butchers (Seeiso & McCrindle, 2009).
South Africans are devoted meat eaters with poultry being most popular due to price, followed by beef, pork and lamb. Consumer preferences show trends toward leaner meats due to health concerns. There are also almost 700 000 Muslims in South Africa, indicating a significant demand for Halaal meat. The National Independent Halaal Trust certifies approximately 385 butcheries and meat companies nationally (Umsombomvu Youth Fund, 2007).
As a substitute product, soy and soy products are viewed favourably as an alternative source of protein by a significant proportion of the South African population (>60%) according to a study done by Bosman et al (2009). Bosman et al (2009) further found that 68 percent of Indians and 76 percent of Black people consume soy and soy products as opposed to 25 percent of White people, that more than 79 percent of South
Africans believe that soy has many health benefits, and that over 60 percent already use soy.
In South Africa, the commercial sector of the South African beef industry cannot meet domestic demand and as a result, 35 000 tons of beef and 300 000 weaner calves are imported annually (Pyper, nd.)
5.3 EMPIRICAL FINDINGS
Interview responses reported are consensual amongst the three family business owners. From the responses given, it is evident that over generations and decades of working together, the family members involved in the business have thoroughly discussed and clarified governance issues, and designed and implemented governance structures, procedures and policies that ensure all members know and accept their roles and responsibilities in both the family and the business. Responses to interview questions are reported as per the questionnaire structure.
5.3.1 Questionnaire section A – Family business background and operations