WINDHOEK – Namibian consumers, crushed under a wave of prohibitive beef prices since the beginning of this year already, should brace themselves to suffer even more as poultry prices are expected to go up in the next two weeks.
Consumers already battling a combined outstanding consumer debt of N$36.6 billion that has central bank authorities concerned are in for another rude shock in two weeks when Namibia Poultry Industries (NPI) release their new prices for locally produced chicken.
Early indications are that poultry prices will climb considerably, albeit not as much as the 15 to 20 percent hikes that red meat went up with at the beginning of the year.
The bad news for consumers comes barely five months after they had to brace themselves for a rather hefty increase of 12.5 percent in the price of locally produced roast baby chicken last October. Citing the reason for the impending increase, Managing Director (MD) of NPI David Koen says stakeholders have been monitoring market trends carefully since the beginning of the year and NPI is now in the process to finalise the proposed price structure as from the end of February. “While we rejoice in the fact that the price of imported maize as fodder for our chickens has dropped by N$300 per tonne in the past week, the price of oil soy cake as another vital fodder has not come down. About 75 percent of our chickens’ diet is made up by these two feeds and without them we can’t survive as there is no alternative. We import maize now at about N$3 300 per tonne compared to N$3 800 a few weeks ago, but we are faced with a new dilemma due to the drought in the maize production areas of South Africa, maize is becoming increasingly scares to import,” he said. “In the past, we were still able to acquire maize from these areas in March, but this year the maize tap from those places will run dry as our neighbour is battling with its own situation,” he said.
Towards the end of last year the Managing Director of Namib Mills, Ian Collard, said it was impossible to produce roast baby chickens at the current price structure and not much has changed since then. “The main reason is that with the current pricing, broiler production in Namibia and also South Africa is not economically viable. We can maybe argue that we also went through a series of input cost increases in electricity, water and fuel, but these are not the main reasons. In short, chickens/broilers are too cheap to facilitate local production,” he stressed. Collard further explained that both the Namibian and South African poultry industries have come under pressure last year, because of cheaper imports from Brazil and, more recently, the European Union (EU). “If the International Trade Advisory Committee’s ruling is in favour of the South African Poultry Association, then the prices of overseas imports into South Africa and also Namibia will increase, allowing local prices to reach more sustainable levels. The same levies apply for imports outside of SACU member states. Taking the above into account, then the current prices in Botswana, Zambia, Mozambique and Mauritius are more in line with what we envisage as the trend line prices for the near future. These countries have protection for their local poultry industries. Although this may seem to be another blow to the consumer, taking the price increases into account the past months, the longer-term benefits will outweigh it,” he explained.
Unfortunately, the above are medium to longer term advantages. Collard said last year, news focussed on the huge NPI investment of N$600 million done under the SACU ruling regarding Infant Industry Protection (IIP). IIP for the industry was already obtained in 2001, but it took quite some time for investors to muster enough capital and courage to start with the project. Approval for the capital expenditure was obtained somewhere around 2010, along with financing. “Unfortunately by the time that commissioning of the investment took place in May 2012, IIP did not come into force as quickly as expected. Fortunately the government gave protection under a managed quota system, with effect from May 6, 2013. During this period, chicken prices hit an all-time low in South Africa and Namibia, due to the importation of chicken from Brazil, and lately the EU, especially leg quarters. The surplus created by cheap imports into South Africa therefore had a bump-on effect in Namibia. At that stage 1.5kg IQF Chicken retailed for N$24.99 in Namibia,” he said. According to him this placed a tremendous strain on the poultry industry of South Africa, and the newly commissioned investment in Namibia. Moreover, taking the above into account NPI could not have started at the worst time, Collard said. However, he is convinced that the implementation of certain measures by the Ministry of Trade and Industry will help the industry in the future. “In the meantime NPI has also created a lot of efficiencies in their production system and we can now proudly say that the company produces chicken at or above the world Cobb standard,” Collard further said
Cobb is the type or breed of chickens utilised in the production of meat. This however is still not enough to ensure sustainability for the current investment, let alone any other new investments in the industry. “This protection is industry specific and not company specific. These arrangements were specifically created by the Namibian government to ease undue pressure on the local manufacturing industry as per Vision 2030 and NDP4. The programme is called ‘import-substitution’ in order to create sustainable local industries and therefore grow the economy and create jobs. Today Namibia is self-sufficient regarding pasta production, prices are lower or on par with South Africa and the per capita consumption has more than doubled in the past 10 years.
“I think the retailers, consumers, employees and the government should give NPI a fair chance to start doing good business and slowly but surely unlock good value for the local economy. We are looking forward to creating a healthy sustainable poultry industry,” according to Collard. Meat prices, especially that of beef, have shown a steady rise since the beginning of this year and on average have gone up by some 15 to 20 percent for all of the most popular cuts. Fish prices of the cuts in highest demand have also shot up, in some cases with as much as 80 percent.
By Deon Schlechter