Local beef producers are demanding a seat at the Meat Corporation of Namibia (Meatco)’s table, saying they have the expertise to offer that which can salvage what they believe is an entity on its way into obscurity.
The producers say they want to make Meatco profitable again.
Their call for an audience with agriculture minister Calle Schlettwein and minister of finance Iipumbu Shiimi comes at a time when around 250 farmers are owed N$320 million by the company.
One of the disgruntled producers is Rian van Wyk, who says Meatco owes him around N$6 million.
Last year around this time, Van Wyk, who is one of the top five producers for Meatco, was owed around N$17 million.
“As producers, we are in a very desperate position. We are not getting paid on time as is in the agreement. We are being paid 50, 60 or sometimes 80 days later,” he stressed.
Van Wyk said the delayed payments put a strain on them, leading to failure to honour their financial obligations to farmworkers or suppliers. In a statement this week, Meatco explained why it struggled to pay producers on time. “Meatco experienced delays in clearing consignments and subsequently, the business experienced cash flow constraints to pay all producers within the established payment terms of 30 days. However, this situation has been addressed. All documentation has been shared with clients, and consignments have been cleared safely for those still enroute to their final destinations. Meatco is thus currently catching up with all producer accounts in arrears,” the company said.
“It is worth noting that Namibia remains the only country in Africa that can export to lucrative markets such as Norway, China, USA and the rest of Europe through Meatco. Meatco remains agile in maintaining these markets by responding to regular stringent international audit requirements”, they continued.Van Wyk said during an interview this week that he was speaking on behalf of all producers. By doing so, he said, he had placed his own head on the proverbial slaughter table, as it could have negative ramifications for him in the future.
“We do not want to point fingers at anyone. But if Meatco collapses like Air Namibia or the SME Bank, Namibia will be in trouble. We cannot allow Meatco to fail. The agricultural sector has the potential to uplift this country. Let us put our hands together to fix Meatco. Let’s bring expertise, and appoint the right people. We can turn Meatco into a profitable organisation within a year,” the farmer said.
He then turned to the ministers, saying: “We are not interested in politics. We want to do business. We are pleading with Schlettwein and Shiimi to sit with us for us to show them what we can bring to the table. We have a lot of expertise to offer.”
To those casting aspersions on Meatco’s stewards, the entity had this to say: “Meatco has a capable and functional managerial team that is providing leadership and strategic foresight across the board.”
Meanwhile, Van Wyk hastened to say as Meatco producers, they are also not opposed to healthy competition by their rivals, Beefcor or Savannah Beef, both of whom have made significant inroads into the beef market. “We don’t have a problem with Savannah Beef, Beefcor, or the Outjo guy. The others are expanding, while Meatco is struggling. It is because of management. Let’s fix the organisation,” he reiterated.
Meatco’s figures
However, if Meatco’s figures are anything to go by, the entity is on an upward trajectory.
“The institution recorded a revenue of N$775 million YTD (between January and August 2023), of which N$600 million was paid to producers during the year under review,” the entity said.
Tough times
The past few years have been a bumpy ride for the institution, it conceded.
“The success of Meatco depends on optimal throughput, operational efficiency, and efforts to maximise market returns. Throughput remained a protracted challenge for Meatco over the past three years, with the institution having recorded an average 35 000 cattle slaughtered in the past two years”.
At present, the national herd is back at 2.5 million.“To this end, Meatco has slaughtered 53 820 cattle both from the south of the Veterinary Cordon Fence (SVCF) and the Northern Communal Areas (NCAs), translating into 9 672 tonnes of beef sold YTD up until August 2023, locally and internationally,” Meatco continued.
Progress
In August, New Era reported that Meatco generated N$297 million between May and June this year. In May, 7 681 animals were slaughtered at Meatco abattoirs countrywide, while June figures stood at 11 379.
Since January, over 38 000 animals have been slaughtered at Meatco’s slaughterhouses.
On the marketing front, the total marketed volumes for the period January-June were 5 515 metric tonnes (MT).
In the process, N$444 million was derived from local, regional and international markets. Additionally, the trade ministry, in collaboration with the Meat Board of Namibia, has approved a quota allocation of 75% (1 200 MT) to Meatco for the export of beef to the lucrative Norwegian market during the year 2023.
Challenges
According to a March forensic report by Ombu Capital, a firm owned by former Standard Bank Namibia CEO Vetumbuavi Mungunda, Meatco loses at least N$5 million a week. That report covered a seven-month process of analysis and sector-wide consultation, and recommends what the authors view as a viable business model for Meatco’s long-term sustainability.
“Meatco is currently incurring monthly losses exceeding N$20 million per month, which must be stemmed before these place Meatco’s operational existence and the livestock sector at risk, a sector which sustains over 60% of Namibia’s livelihoods,” Mungunda said earlier this year. His loss estimates are said to be true to this day, according to insiders.
At the time of its compilation, Meatco’s liabilities exceeded its assets by N$133.2 million. “There is a presumption of reckless trading when conducting business under these circumstances,” he stated.
Mungunda also discovered that the company operates in a highly secretive world.
“We have been refused access to the Meatco board’s meeting packs and minutes, as well as the meeting packs and minutes for the executive committee meetings. This highly unusual act from Meatco and the lack of transparency is concerning,” he emphasised. Meatco has experienced shrinking gross profit margins, which, combined with reduced throughput, have resulted in losses since 2018. These losses increased significantly to N$119 million in 2021, N$205 million in 2022, and an estimated N$196 million in 2023. While acknowledging a challenging financial period over the past two years, Meatco’s CEO Mwilima Mushokabanji has been adamant that they are out of the doldrums.
“When considering the performance of our business, it is evident that we are firmly on the right path. We have successfully established a resilient organisation, capable of weathering any potential liquidation threat. There is a bright future for Meatco,” he told this publication in
July. - emumbuu@nepc.com.na