On the spot - Meatco broadens its horizons… new markets mooted for sought-after beef
Meatco CEO Mwilima Mushokabanji (MM) has hit the ground running since his appointment in February this year. New Era engaged him on some of the challenges, opportunities and immediate plans at the corporation.
NE: How would you describe the position of Meatco CEO now that you have been at the helm of the company for almost seven months?
MM: Meatco is a national asset that is, among others, mandated to promote and coordinate the interests of livestock producers in Namibia and strive for the stabilization of the meat industry in the national interest. During the first seven months of my tenure as CEO, we focused on building a dynamic commercial public enterprise that is competitive, profitable and sustainable. Specifically, we aligned the structures and talent within the organisation; strengthened our relationship with our key stakeholders, namely, livestock producers, government, regulators, employees, customers and suppliers of goods and services; identified and resolved the business activities that were making Meatco uncompetitive, improved access of communal and emerging commercial farmers from remote areas such as Gam, shortened the releasing period of products under test and hold to export markets, reviewed policies, procedures and practices for the organisation as well as implemented cost-cutting measures to minimise losses and make the business efficient and effective.
NE: Speaking under correction, Meatco last year made a N$100 million loss and this year so far the figure stands at over N$50 million while there are limited numbers of cattle to slaughter. What are your plans to save Meatco from this difficult operating environment?
MM: The drought of 2019/20 compelled Namibian farmers to reduce the core herd and adjust their cattle numbers to the available grazing. Our facilities worked at 120% capacity employing 326 temporary workers and working overtime to cope with the supply pressure. The combination of maintaining competitive prices, poor quality of cattle, and the overall reduction of market realisation had a negative impact on Meatco’s financial results. Our mission is to improve the socio-economic environment in Namibia through maximising producers’ returns. In light of the epic drought and other economic factors, our mission took precedence over the bottom line. Ultimately, we paid over N$1.1 billion to the producers, which includes a premium of N$190 million above the South African Parity Price thereby stabilising the meat industry in the national interest. Please consult our audited financial statements in the annual report 2019/20 for further details.
We are aligning our structure and strategy for livestock production and value addition that will focus on paying competitive prices to our producers and render an integrated bouquet of services to communal, emerging commercial and commercial farmers across the country as well as to invest in all supply streams with potential to increase throughput at the abattoir in the coming year.
NE: In terms of meat production, what is the reason that we don’t have functional and international meat processing facilities in meat producing regions such as Omaheke and Otjozondjupa?
MM: The Windhoek abattoir has the capacity to slaughter 120 000 cattle per year. The Okahandja abattoir, which currently is used as a cold storage for shipments through Walvis Bay to export markets, has the capacity to slaughter 100 000 cattle per year. As indicated in your previous question, there has been a decline in the availability of slaughterable animals due to drought as well as change in the production system that promotes production of weaners that are exported mainly to South Africa that is influenced by predatory weaner prices.
At the moment, Namibia has access to South Africa, Reunion, Norway, EU, China, USA and the DRC whereas Meatco has enough capacity to slaughter cattle from Omaheke and Otjozondjupa regions. Furthermore, it will require a substantial investment and time in establishing new abattoirs that are certified for export that will actually compete for the insufficient raw material available in Namibia. In this regard, we shall focus on making it easier for livestock farmers in Omaheke and Otjozondjupa to prefer marketing their cattle directly to Meatco.
NE: What is the status of the Witvlei abattoir?
MM: I suggest that you approach the operator of Witvlei abattoir to ascertain the status.
NE: What are the incentives available to farmers as the Covid-19 crisis prevails?
MM: We have shortened our payment terms from 60 days to 30 days to improve the cashflow situation of farmers. Meatco has re-introduced the Fixed Price Slaughter Contract to secure cattle for the remaining months of the year at a future price that was agreed with the farmers. Furthermore, Meatco has secured a government guarantee which is ringfenced for purchasing livestock from the farmers. This guarantee will enable Meatco to further shorten the payment terms to be within 30 days, thereby improving the cashflow of the producers.
NE: What initiatives do you propose to revitalise the farming industry, more specifically for the meat producing farmers?
MM: Meatco will strengthen its dynamic capabilities to coordinate and promote the interests of the livestock producers in Namibia through a multidisciplinary approach that involves the Directorate of Veterinary Services, Meat Board of Namibia, Agribank and farmers’ unions to provide advisory services to the farmers across the country to enhance their understanding of animal health and market requirements in order to produce the quantity and quality of cattle in order to exceed the expectations of Meatco’s customers locally and abroad.
NE: Why are meat prices not determined by farmers and how long do you think meat prices will be dictated by Meatco?
MM: Meatco is obliged by its establishing law to determine the product prices payable to producers of livestock for livestock sold and delivered to the corporation. Actually, the meat industry stakeholders benchmark against our prices thereby stabilising the prices to the advantage of livestock producers. According to the Meatco Act 2001, section 4 (b) (i) determines the product prices payable to producers of livestock for livestock sold and delivered to the corporation.
NE: When do you think Namibia will adopt a direct farmer’s stimulus portfolio such as that which is used in countries like the Netherlands?
MM: The stimulus package for livestock farmers is a possibility, however, it will be based on government policy and needs of the key stakeholders in the meat industry. This requires an ecosystems-thinking approach by the meat industry stakeholders that is responsive to the development agenda of government that is increasing the agriculture sector’s contribution to the gross domestic product, foreign exchange earnings and industrialisation.
NE: Where do you foresee Meatco’s financial position within the next five years?
MM: As I indicated earlier, we are building a dynamic commercial public enterprise that is competitive, profitable and sustainable to survive the global business environment that is volatile, uncertain, complex and ambiguous. We are reviewing an Integrated Strategic Business Plan for the next five years which serves as a corporate instrument that provides clarity, direction and focus on how Meatco goes about fulfilling its mandate.
The analysis, review and alignment exercise aims to connect the Meatco vision, mission, values and strategic focus areas.
Clear key performance indicators and targets are set out to be monitored and incorporated in the individual balance scorecards for performance management purposes. Performance with purpose by our employees, timely funding and robust implementation of the strategic activities will place Meatco in a position that will rebuild its reserves and significantly improve the bottom line during the next five years.
NE: Do you envisage any new markets for Namibian meat, and if so, when do you intend accessing these new markets?
MM: We are striving to unleash the potential of African and Middle East markets. These markets will be served by our operations in the northern communal areas where strategic interventions are being put in place to establish a beef value chain involving fodder production under the green scheme, improve the quality of animals in feedlots, and operate the Rundu abattoir and export products to these markets through a commodity-based trade approach under the Meat Market Africa brand.
NE: How have the markets of China and the USA benefitted from Meatco thus far and do you intend strengthening your presence in these markets?
MM: These are newly developed markets. We are still going through teething stages. However, by the end of this year we will be in a position to have a clear overview on how these lucrative markets have contributed to the corporation’s bottom line. The benefit of China is that it accepts our bone-in-beef products which is not the case with other markets beyond Africa.
As the only abattoir in Africa having access to the USA market, Meatco entered the USA market in the middle of a Covid-19 pandemic, however our products continue to make their presence felt competing with products from larger international meat processors. Our market realisation from both China and USA markets are significant to the overall revenue and definitely we will continue to upscale our customer value proposition in these luxury markets.
NE: What else can you add?
MM: We reviewed the vision of Meatco which now reads “To be a world class meat brand creating sustainable wealth for all Namibians”.
2020-10-09 10:23:10 | 16 days ago