By Staff Reporter
WINDHOEK – Meatco paid the highest average price in the company’s history during April 2014.
N$31.00 per kilogramme was paid across all grades with huge financial benefits for more than 1 200 producers in the Northern Communal Area (NCAs)’s abattoirs and some 2 300 producers south of the Veterinary Corridor Fence (VCF). Quality and weight also improved immensely in the NCAs, and combined with the prices Meatco is able to pay because of the increased Norway quota and positive exchange rate, prices increased by more than N$10 per kilogramme. According to Neu-Nique Williams, Meatco’s Corporate Communications Officer, for the year to date, the company has also paid out N$30 million in additional premiums to its producers. The average producer price for the year has remained relatively constant at N$30.92.
The average weight in the NCAs, which includes the Katima Mulilo and Oshakati abattoirs, is 15kg more than last year. In April the average carcass weight was 177.4kg compared to 162.5kg in April 2013. In terms of quality, 0-grades (very skinny animals) contributed 45.6% to the total slaughter figure last year. This year so far, 0-grades contributed only 23.6% of the total slaughter figure. This shows an improvement of 22 percentage points on 0-grades only. A-grades increased from 1.3% last year to 5% this year.
Although Meatco received far fewer animals in April, the quality of animals received in the NCAs is much better in terms of weight and fat grade. The average producer price in the NCAs paid for April 2014 was N$27.49 per kilogramme – N$10.48 per kilogramme more than the average price of N$17.01 a year ago.
South of the Veterinary Cordon Fence (SVCF) Meatcopaid N$9.66 more per kilogramme this April than in April 2013 for C-Grade animals. For B-grades Meatco paid N$8.47 more, for AB grades N$6.33 and for A-grades N$6.23 more per kilogramme. The average price for A-grades this April was N$32.13. Prices have never been this high.
A huge difference in the quality of animals was also noted this April. It has improved greatly this year, even though the average weight is almost the same. Last April 0- and 1-grades (skinny animals) made up 34.5% of the total number of cattle slaughtered. However, this year 0- and 1-grades only made up 18.9% of the total number of cattle slaughtered for the year to date. This is an improvement of 15.6 percentage points.
For the financial year to date, including February, March and April, Meatco has paid a total of N$30 million in additional premiums. This includes the off-season premium, which was paid until the end of February, the fat-equalisation premium, the market premium and the contract premium. This April alone, Meatco paid N$10.2 million in premiums to farmers SVCF and N$1.41 million in premiums to farmers in the NCAs. This amounts to N$5.92 per kg in premiums that was paid out for both NCAs and SVCF.
This April Meatco paid a total of N$11.63 million in premiums to producers, compared to last year when it paid N$3.5 million in premiums.
Regarding future prospects, Nico Weck, Meatco’s Chief Financial Officer, says at this stage the market price for beef products is under pressure in most of their markets, and it is slowly but steadily declining as a result of the stronger rand with the expectation that it will remain strong in the medium term. “In contrast, our producer price remains stable. If the rand continues to strengthen, there may be a possible decline in the producer price to protect the business margins,” Weck says.
“For the next three months our SVCF’s abattoirs are relatively fully booked. The great uncertainty at this stage is what will happen with the exchange rate. If the exchange rate continues to weaken we will have to adjust the producer price accordingly. The stronger the rand, the less we will get out of our high value markets.”
He says currently in the peak season with regards to the availability of product, so when the product becomes less, the market prices will increase. The European summer season has also begun. Therefore a product price increase is expected, especially with regards to the high value cuts. Meatco’s ultimate goal remains to keep producer prices as stable as possible. However, at this stage it cannot guarantee anything.