Input costs for livestock farmers are expected to increase dramatically in 2022. On this weekend’s podcast, supply chain executive at Beefmaster Group, Roelie van Reenen, gives us some insight on how livestock producers can weather the surge.
For many cattle farmers, 2021 has been a good year due to higher weaner prices. Van Reenen says the reason for the increase is due to scarcity. “We came out of a drought period so there are less animals available and that brought about a substantial increase in the value of [those] animals. That being said, we have to focus on the future. It will [still possibly] be a good time ahead with some increasing costs.”
The livestock industry is bracing itself for an increase in input costs – particularly in relation to animal feed – though van Reenen says the increases can be difficult to predict. He adds, however, that the drastic increases in the prices of fertilisers will have a knock-on effect on animal feed prices.
“The grain industry experienced a huge increase in input costs directly related to their fertilisers, [which means] that there is a very good chance that we would see an increase in input costs for cattle farmers. [This is because] products like forage and grains will be more expensive in the future.
“It is something we see all over the world – that those products are [currently] very expensive and are likely to remain expensive. So [that is] definitely going to impact cattle production, [which is why] we need to focus on a higher production on animals.”
Roelie van Reenen, supply chain executive at Beefmaster Group
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Plan and prepare properly
Van Reenen explains that farmers need to approach the new year with cautious optimism. He says that it might be foolish for farmers to continue running their operations thinking that things will remain as they are now. “We have to consider that things always draw back to equilibrium and that might just influence you negatively if you do not plan ahead.”
Key to preparing for an increase in input costs, is upping production, Van Reenen advises. “We need more numbers, we need to increase turnovers so that we can mitigate the expected high overheads we might see in 2022.”
Referring to the fable of the ant and the grasshopper, van Reenen says livestock farmers need to be like the ant. “We need to make sure that we prepare for difficult times ahead. The ant does that every year when he prepares for winter but the grasshopper does not. The grasshopper just consumes and expects everything to be okay and that someone else is going to look after him. We need to focus on ourselves by preparing for the future.”
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