Cheap cattle slaughterers serious competition for Meatco

03 Jul 2013 09:30
WINDHOEK, 03 JUL (NAMPA) - Local competition from cheap cattle slaughterers as well as competition from South African feedlots appears to be a thorn in the flesh for the Meat Corporation of Namibia (Meatco).
Meatco raised this concern in its 2012/2013 financial report, made available during its annual general meeting last month.
The company said it is faced with a declining market share of the available pool of slaughter cattle, which is due to local competition from cheap slaughterers, as well as competition from South African feedlots.
It is estimated that 70 000 cattle are slaughtered per year by butchers producing meat for the local market.
However, these competitors source the cattle directly from farms and at auctions, offering prices higher than Meatco?s daily prices.
?They are able to do this due to a lower cost-structure as they do not have the same quality and hygiene standards that Meatco must adhere to. In addition, their products are not graded by an external party, and they can sell their product at any grade they deem fit.
In reality, the butchers slaughtering for the local market are growing rapidly at the expense of export abattoirs, while at the same time, the current cattle market is more supportive towards live weaner exports at the expense of the local slaugther industry,? the company cautioned.
Competition is also strong from South African feedlots, which take approximately 45 per cent of all cattle marketed in Namibia.
These feedlots buy animals as weaners, and have the advantage of being allowed to use growth promoters and stimulants to speed up and increase growth, and therefore overall performance. According to the report, this allows those feedlots to pay relatively high prices for Namibian dry weaners. This price advantage, in turn, negatively impacts local efforts in respect of weaner retention.
Meanwhile, live exports to South Africa decreased to 38 per cent, while local butchers increased from 15 per cent in 2011 to 19 per cent in 2012.
During 2011, live exports to South Africa amounted to 49 per cent, which represents a three per cent increase from the previous year. Butchers from the local market went up from 13 per cent in 2010 to 15 per cent in 2011.
Meatco in the same year experienced a decrease in cattle exports by two per cent - from 27 per cent in 2010 to 25 per cent in 2011.
Meatco as an international food business operator must adhere to stringent sanitary and phyto-sanitary, quality and hygiene standards, which increases its overhead costs.
The corporation is a much bigger operation with a capacity to slaughter 180 000 animals per year, compared to the smaller local operators. It, therefore, has a much bigger fixed-cost component, a comparatively negative factor which is compounded by lower cattle numbers, the report stated.