December 19, 2007

Rising US corn prices blamed for closure of South African feed operation

Heightened demand for corn for US ethanol production has led to the closure of one of South Africa's largest feedlot and abattoir businesses, according to the Northern KwaZulu-Natal Courier newspaper.

Crafcor Feedlotting and Meat Distributors founder and owner, Izak Crafford blamed US ethanol production for fuelling feed prices which ultimately forced him to make the decision. The feedlot has been in operation for 27 years.

Increased labour costs was also partly responsible for the decision.

However, he said the cost of feed has risen to unacceptable and unprofitable levels since the US decided to use corn for the production of ethanol.

The business had an annual turnover of almost R1 billion (US$144.2 million) a year at its peak, according to local papers.

Three hundred workers would be laid off at the facility when beef slaughtering operations ceased on December 31. A further 126 people would be laid off at the company's feedlot operations which can house as many as 35,000 heads of cattle.

Crafford said he was able to meet only 35 percent of his feed needs from his own farms. The abattoir would still continue in its pig slaughtering operations.