Saudi Arabia resumed imports of SA beef this year, more than two decades after a trade agreement was suspended due to concerns about foot-and-mouth disease.
Business Day spoke to Wiaan Smit, CEO of Al Mabroor Projects, a sharia-compliant investment house, which owns almost 100,000 livestock, about the opportunities for the beef industry as a result.
First, can you tell us more about Al Mabroor Projects?
We are a private equity investment company that started in 2014 and we focus on the sharia space for Muslim investors. Our main focus has always been in the agricultural sector, predominantly beef and lamb. We have about 50,000 cattle and 40,000 sheep on various farms in the Eastern Cape and the Free State. We have also bought a feedlot in Mpumalanga that has capacity for 45,000 cattle.
As a sharia-compliant fund, Al Mabroor and its sister companies are well positioned to grow exports to Saudi Arabia.
What does the reopening of Saudi Arabian beef exports mean for SA’s industry?
The opportunity for the SA beef industry lies in increasing exports, especially with our favourable exchange rate, which will play an important role in creating jobs.
From a farming aspect there will need to be a lot more people working in feedlots and abattoirs. I think more abattoirs need to be built. Also, more people needed in the transport sector to transport the animals.
One needs a large volume of maize and roughage to feed the animals, so in producing feed for the animals one would create jobs too.
Is there high demand for SA meat in Saudi?
There is, but demand in China is even bigger. SA will have to find a middle ground where it can sustainably export a certain number of animals while ensuring there is sufficient local stock.
With that in mind, I did a quick calculation. Saudi Arabia were talking about a $2bn beef industry, so to supply the whole country you would have to export 50,000 whole carcasses a week. That would mean slaughtering all of SA’s cattle in three years. So SA certainly can’t supply all of Saudi demand; they will still have to import from Brazil and Australia.
Will there be enough meat available locally if SA farmers increase exports?
The export market buys high-quality meat cuts. They’re often just looking for the prime cuts of beef. Obviously, that drives up the local prices of prime cuts.
The rest [of the cow] goes into the local market, especially the cuts you need for mince. So exports are good for meat producers, but the local consumer may be paying more to have a braai at the weekend.
Are live cattle exported from SA?
Normally they are slaughtered and the carcasses are quartered. In most instances, the carcass is then frozen and exported. There are one or two SA companies exporting livestock. They would have a direct agreement with a company in Kuwait or Qatar. Al Mabroor isn’t involved in that space.
What makes SA’s beef sector competitive globally?
SA offers consistently good-quality meat at affordable prices. We have very skilled farmers who produce high-quality calves for our feedlots.
The main feedlots in SA have been around for many years and are experts at producing their own feed, such as silage, or purchasing by-products of human food such as hominy chop [food produced from dried maize kernels], maize germ and brewer’s grain. These factors help keep feed costs low.
Is beef still relatively affordable in SA compared with other countries?
The affordability of beef in a country typically depends on the availability of what is produced locally. In SA, beef is relatively affordable compared to countries that do not produce their own beef.
No doubt you’re happy about the opportunities offered by Saudi Arabia?
Definitely. We are attracting new investors daily. We can use the money to buy more animals and more farms. And this is contributing to the economy.
We’ve been waiting for opportunities that create greater demand for meat. We have been involved in business development in the Gulf region for some time and have already started talks with more Saudi Arabian importers.
• This interview has been edited for clarity and brevity.
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