Savanna Beef goes for the jugular

Savanna Beef goes for the jugular

Savanna Beef continues making steady headway in its quest to revolutionise and revitalise the Namibian beef sector after the new producer-owned beef-processing and marketing entity secured additional funding of N$150 million.

The funds were secured from the South African Industrial Development Corporation (IDC).

Once fully-operational, the ambitious entity is planning to slaughter, on average, 250 cattle per day.

They are aiming to make major inroads into the highly-lucrative European market, as well as the untapped Asian beef market.

They furthermore plan to establish trade ties with the likes of Australia and New Zealand, who are both world-renowned beef-exporting nations, bringing competition right at the doorsteps of struggling public-owned Meat Corporation of Namibia (Meatco).

GPS

It was also reported last year that Savanna Beef had secured a sales and marketing agreement with GPS Food Group in the UK, which would provide further access to global beef markets.

GPS is the same entity which previously provided marketing services for Meatco.

However, this service was terminated in 2023. At the time, Meatco cited financial constraints.

Details about Meatco’s decision are contained in a forensic report by Ombu Capital, a firm owned by former Standard Bank Namibia CEO Vetumbuavi Mungunda.

“The contract between Meatco and GPS came to an end in April 2023. We already informed GPS that we would be domesticating and taking over marketing and sales, and we are doing it ourselves as Meatco,” he stated at the time. 

Mwilima observed that it was prudent for Meatco, which has the capacity and responsibility to market Namibia’s meat products, to take over its core responsibility that was outsourced to GPS for more than 15 years. 

Late last year, Savanna Beef faced several minor challenges, such as a delay in the release of the requested loan drawdown from IDC, which is the main lender. The delay in releasing the funds was due to legal challenges which were beyond Savanna Beef’s control.

On track

But all the hiccups have been resolved, and the construction and financing of the plant are now in full swing, with the completion of the N$500-million facility expected by August 2025.

John Muinjo, a veteran farmer who is a board member of the Beef Value Chain Forum and Savanna Beef Operations, shared with this publication that the anticipated completion of the facility is well on track as the IDC had released the first batch of funding from the N$150 million loan, and all design challenges for the various production lines had been ironed out.

“The first funds from the IDC were released into our account, and special meetings on the detailed design were successfully held in Johannesburg with the contractor and its engineering team to address the backlog. I can confidently tell you that everything is well on track, and by August this year, the contractor will hand over the state-of-the-art facility.

“It will then be followed by in-depth health inspections at the facility to ensure that it is in compliance with all required international standards. We are on the move, and this should be exciting news to all Namibian producers because this entity will serve all local farmers, commercial and communal breeders,” he added.

After the handover of the facility and health inspections, the entity will run a slaughter trial test. By February next year, it expects its first consignment of beef products to hit the global markets.

On progress made, Muinjo said the final designs and layouts of the different production areas such as the slaughter line, offal, chillers, deboning hall and final product packing, have all been finalised. The steel structure, walls, roofing, cladding and the outer insulation panels for the cooled areas have also all been completed.

The orders for the refrigeration plant and major processing equipment with long lead times have been placed, which includes equipment for products required for specific markets, he shared.

The powerhouse, in which the main high-voltage electrical equipment is accommodated, has likewise been completed and the electrical switchgear installed, while major civil works for the water reclamation and treatment plant have been finalised. Potable water pipelines have been commissioned, and the evaporation ponds have been lined.

“The housing for the refrigeration equipment, the workshop and ablution facilities have been built. The drainage piping has been installed, and the special high-quality concrete floors are in place. As an entity striving for global standards, our emphasis is always on efficiency, hygiene and the quality of the product,” added Muinjo.

Resistance

The arrival of Savanna Beef, which is mainly a conglomerate of private beef producers, is seen by certain key players in the local beef sector as a direct threat to the existence of state-owned Meatco.

Meanwhile, the beleaguered Meatco has embarked on a search for a new CEO after its board of directors decided not to renew incumbent Mushokabanji’s contract, which ends this month.

In the interim, the Meatco board has appointed Patrick Liebenberg as acting CEO for six months, or until a substantive CEO is found. Liebenberg is the current executive for livestock procurement and production at the company.

Meatco is believed to be currently enjoying an over 70% local market share, but its overall performance and poor financial status remain a going concern, especially for a State-owned entity that enjoys so much monopoly within the domestic sector.

Meatco’s troubles are not new, as a March 2023 report by Ombu Capital said Meatco was losing at least N$5 million a week.

The Ombu Capital report covered a seven-month process of analysis and sector-wide consultations, and concluded that Meatco was facing an existential threat. The report also highlighted that Meatco’s liabilities had exceeded its assets by N$133.2 million.

While Meatco’s fall from grace can be argued from various angles, there are those in the local beef sector who are convinced that Savanna Beef was primarily created to further cripple Meatco and elbow the SOE out of the world’s most lucrative markets, especially the Norwegian beef market.

No Beef

But Muinjo maintained that such assertions are trivial politics, and Namibians should look at Savanna Beef’s arrival as an alternative for farmers, and a growth catalyst for the country’s beef sector.

“As a country, we need to look beyond petty politics and decide what will work best for our farmers, and what is in the best interests of our beef sector, which is respected globally. The support we have received so far from the government and other stakeholders has been great, and we plan to deliver on our promise of taking Namibian beef to all parts of the world. We are ready to work with all local and international stakeholders, as we are all in the same sector at the end of the day.”

-ohembapu@nepc.com.na