Meat Prices Set to Drop

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By Petronella Sibeene WINDHOEK Meatco’s selling prices are under immense pressure following a drop in the price of meat in South African markets. Since January 2007, the average price paid has been N$17.96 per kilogram, giving an indication of a one Namibian dollar drop. According to the Marketing Manager at Meatco, Andre Mouton, prices might continue to drop by 50cents in the coming few weeks just before the situation normalizes. The Red Meat Abattoir Association’s (RMAA) price for A-grades in the South African market dropped since the first week of January 2007 from N$20.50 to N$18.68 – a drop of about N$1.82 per kilogram. The price for C-grades dropped to N$16.54 per kilogram. Under the conditions of the severe drop in prices, Meatco has no alternative but to follow the downward movement of RMAA prices, Mouton said. “We follow the market trend. Meatco has to remain competitive and can therefore not afford not to adjust its prices accordingly,” he added. The low market prices in South Africa caused a strong drop in Meatco’s selling prices in the South African market.ÃÆ’Æ‘ÀÃ…ÃÆ”šÃ‚  Imported meat prices in that market are unfortunately still lower than Meatco’s selling prices, putting immense pressure on Meatco’s current price levels. This drop in prices comes as a result of consumers who now have disposable income influenced by the hike in interest rates over the last six months. Prices will normalize when the panic of overstock is resolved, Mouton assured. While he could not clearly state what implications this pressure would have on Meatco’s profits, he stated that Meatco’s profit to some extent depends on the speed at which adjustments can be made to balance procurement prices (producer prices) to the new level of sales values. Mouton described the current price levels as an over-reaction due to the current “re-adjustment” period. He says it should be accepted that price levels might remain at lower levels for the time being. Indications would be that around Easter prices would recover slightly. Namibia is still closely linked to the South African meat industry. The majority of weaners bought in Namibia are being bought by feedlots in South Africa. ÃÆ’Æ‘ÀÃ…ÃÆ”šÃ‚  Meatco also sells more than half its produce to that market. It is therefore dependent on the value achievable in that country’s market.