10 Apr 2006
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By Wezi Tjaronda
The increase in the price of weaners last year continues to have a negative effect on the number of slaughterable cattle delivered to the country's abattoirs.
This year, Meatco expects the shortage of animals at its abattoirs to continue because of this trend.
Although the company increased its producer prices earlier this year as an incentive for farmers to bring their animals for slaughter, the figures are still 30 percent lower compared to those of last year.
Andre Mouton, Meat-co's Marketing Manager told New Era this week that compared to last year, slaughter figures are still lagging behind although supply is increasing rapidly.
The Namibia Agricultural Union recently announced to its members that Meatco still had slaughtering space for 1 680 cattle per factory for Okahandja and Windhoek.
Although it did not mention figures, Meatco confirmed that surplus capacity is still available.
This has led to the meat company to reassess its capacity and adjust accordingly.
"With contracts signed for 2006 at about 30 percent lower than last year, Meatco is seriously re-assessing its capacity situation to adjust to the lower numbers in order for the company to survive in the long term," said Mouton.
Consequent to this, the capacity utilisation of the abattoirs is just over 60 percent but indications are that Meatco will be slaughtering at more than 80 percent before the end of April.
At the end of February this year, Meatco, which was already faced with a shortage of cattle at its abattoirs increased producer prices of four grades of meat as an incentive for producers to market their animals.
The producer prices for A2-4 and AB2-4 were increased by six percent, which amounts to 96 cents per kg, while the grade B2-4 has gone up by seven percent, amounting to an increase of N$1.03 per kg.
In the other grade, C2-4, producers will earn 28 cents more per kg after the producer price was increased by two percent.
Although the number of slaughterable cattle during the December to February period is low, this year has seen lower numbers of animals.
Earlier, the company had said the numbers of livestock are even lower than previous years because as low as 850 cattle were being delivered per week unlike other low periods when about 1 250 cattle were slaughtered per week.
Production figures go as high as 3 000 heads of cattle per week during the peak period from March to end July/August.
Mouton said this shortage arose from the rise in weaner prices, which went through the roof due to competitive feed prices that made South African feedlots more competitive for a brief period.
The Bank of Namibia's Annual Report 2005 has noted that the general increase in the number of livestock marketed last year was due to the high demand and good prices for weaners, which prevailed throughout the year in South Africa.
The report also explains that the demand was due to the low price of maize in South Africa, which was being used for feeding of weaners, thereby making it cheaper to import weaners from Namibia and allowing them to grow to slaughterable sizes in that country.
The number of cattle marketed last year increased by 26.7 percent compared to a growth of 12.0 percent the preceding year.
Mouton said the company is yet to know where the equilibrium will be after the increase of the producer prices in February.
He added that the increase has a dual effect, as on the one hand it is beneficial for the producers as they earn more money, while on the other hand the increase would be on the consumer.
"We do not know their reaction. We can expect that consumers might reduce their consumption of the product. There will be an equilibrium, but we do not know yet where that would be," added Mouton.
With the increase, the company says it is getting closer to increasing its exports to South Africa, where an opportunity opened up for Namibia due to an outbreak of Foot and Mouth Disease in Argentina.
South Africa imports most of its beef from Argentina and Brazil. Meatco usually exports between 55 and 66 percent of its annual production to South Africa.