By Emma Kakololo
WINDHOEK
Government’s decision not to sign the interim accord with the European Union to replace preferential tariff agreements due to expire this year, has sparked concern in the beef industry.
The deal, which is in form of an Interim Framework Agreement on the Economic Partnership Agreements (EPA’s) covers market access and development.
“Meatco fully respects the position the Government of the Republic of Namibia has taken in respect of the Trade Agreement with the European Union.
“It is however important for Meatco to highlight the impact the loss of the preferential market access to the EU will have on Meatco and stakeholders in the beef industry,” Arne Gressmann, Chairman of the Meatco Board said last Friday. Meatco is the country’s largest meat processor.
According to Gressmann, the EU represents the best quality market, with the highest prices for beef products, in the world and it would be catastrophic for the country to lose such a market.
He said the country’s volume of production was too small to compete with the rest of the world – including countries such as Brazil – and therefore finding an alternative market with similar returns would be difficult.
“The EU has been one the most valuable markets for our free-range, naturally produced primary beef cuts worldwide.
“Given its low trading volumes, Namibia is forced to trade a differentiated product mix in niche markets that value the quality aspects of free-range, natural beef. Finding an alternative market could result in reduction of our prices.”
Such reduction, he said, would be against the company pricing policy, put in place to counter the declining slaughter cattle numbers supplied to Meatco over the years.
“The loss of access to such niche markets will not only result in the decline of generated returns, but will also result in a perceived deterioration in the brand value of Namibian beef.
“Namibia will be forced to re-enter into commodity trading, and will subsequently have to compete with large-scale beef exporting countries across the globe.
“These countries are highly competitive and operate on considerably higher volumes and economies of scale.”
Meatco’s price policy is to get the maximum value from the market and return as much as possible to the farmer, he said.
As a result Meatco has paid an amount of N$59 million to producers over and above the equivalent South African meat prices (Red Meat Abattoir Association – RMAA).
This year alone, Meatco has already paid producers in excess of N$55 million (compared to RSA RMAA prices).
He said should the country fail to clinch the EU trade deal at the end of this year, the operational loss for Meatco is anticipated at N$ 156.3 million. This translates to a reduction in producer prices of N$4.49 per kg.
“Producers north of the Veterinary Cordon Fence will experience a loss of N$758.96 per carcass while producers south of the VCF can be expected to lose N$1ǟ