HUNDREDS of people will be out of work in three KZN towns — and the meat price is set to rise — as one of the biggest players in the KZN meat industry, Crafcor, is closing most of its operations.
Crafcor is closing its feedlots, abattoir and meat distribution businesses, which include Hygrade Meats (Pty) Ltd. However, it will continue to slaughter pigs at its Cato Ridge abattoir.
Crafcor runs two feedlots, in Dundee and Wartburg, which together fatten about 60 000 head of cattle for slaughter per year. The Crafcor abattoir in Cato Ridge slaughters about 300 head of cattle per day.
The demise of Crafcor will leave AAA as the main operator in the midlands, with its feedlot handling 30 000 cattle a year and its abattoir 450 a day.
The closure, which is expected to take place by the end of December, comes in the wake of high weaner calf prices (the price at which beef farmers sell to the feedlots) combined with high feed prices.
Weaner prices have nearly doubled and maize prices have more than doubled in the past few years. All other input costs have increased rapidly at a rate far higher than general inflation, which has affected all beef farmers.
Resistance from the consumer to buying meat at increased prices has kept the beef price below that required to keep beef producers viable.
In the press release announcing the closure, Crafcor Group CEO Dou Pienaar said: “The beef industry model … does not allow shareholders to achieve an acceptable return on investment”.
The closure of Crafcor is likely to cause a temporary shortage of beef, but the other large feedlots in the country are expected to expand their sales to fill the gap, although they face the same pressures that Crafcor experienced and it is possible that there may be more beef companies closing.
Beef producers, who supply the weaners for the feedlots, have been hit with a 12% drop in the price of weaners during this past year so they will not be encouraged to continue running cattle on their farms.
To keep up with input costs, feedlotters have had to put up their prices to the butchers and the butchers have passed this on to the consumers, who have as a result bought less meat.
Pienaar said that they have always enjoyed a good relationship with their staff and that they understand why the major shareholder, I.B. Crafford, who is 82, has chosen to liquidate his assets.
“They are obviously disappointed, but understand the reasons behind the decision.”
He confirmed that many inquiries from potential buyers have been received but the funding “just hasn’t been there”.