PR - Should Maize Farmers Consider A Long Term Feedlot In Response To Low Maize Prices: The Case Of The South African Market (p287-296)

The decrease in South African maize prices has led to a situation where producers are facing problems to cover their input costs. The meat sector came up as an alternative and maize producers begin to explore the possibility of marketing their maize through cattle to increase the value of their crop. A feedlot simulating model is used to run different price scenarios and the conclusion is that a feedlot can be profitable and that the value of the maize can be increased at average market prices. It was further found that small changes in input prices (weaner price, carcass price, maize price etc.) have a large influence on the profitability of a feedlot. Future scenarios, using estimated input prices, indicate that the outlook for an on farm beef feedlot is positive and that it may justify the initial investment cost of the feedlot. Maize producers can therefore consider a long term feedlot as a marketing alternative for their maize, but careful planning, good price estimates and superb management are essential for the success of such an enterprise. The vertical expansion of the farm through a feedlot not only adds value to the produced maize, but it also eliminates maize transport costs and spread the risks of the farm.

Keywords: Maize price, beef feedlot, profitability, scenarios