By Hilary Mare
DESPITE a 6.2 percent drop in revenue, amongst a host of other challenges, the Meat Corporation of Namibia (Meatco) has managed to pay nearly N$900 million of its revenue to producers, the firm’s latest financial report has revealed.
The report shows that a total of N$899.852 million, representing 53.12 percent of Meatco’s revenue of N$1.694 billion earned during 2016/17 financial year, was paid out to producers, with the average producer price of N$34.06/kg being 13.64 percent higher than the N$29.98/kg recorded during previous financial year, and 10.76 percent higher than the South African parity price.
“The total premiums paid by Meatco, over and above the South African price, amounted to N$72.191 million over the reporting period. A total of 25.09 percent was utilised to purchase goods and services from suppliers. Salaries accounted for 16.15 percent of revenue generated. Financing costs and taxes accounted for 4.55 percent combined, and 1.09 percent of total revenue was retained as reserves,” the report said.
Meatco board chairperson, Dr Martha Namundjebo-Tilahun, noted that because there are so many factors that influence Meatco prices, such as the exchange rate, changes in political power and fuel prices, the parastatal has tried its level best to stabilise producer prices.
“As farmers began to restock the national herd, the impact of lower cattle numbers meant that Meatco was compelled to offer record prices, in order to motivate farmers to deliver stock to the corporation. We expect in the first two quarters of the new financial year that slaughter volumes will be low and Meatco will have to rely on the backwards integration initiative, to maintain slaughter operations,” she said.
According to the report, Meatco Group recorded revenue of N$1.694 billion, which is 6.2 percent down from the previous financial year, while the corporation itself recorded revenue of N$1.687 billion, which is 6.3 percent down from the previous reporting period.
The group also generated a net profit of N$19.3 million after tax, compared to a profit of N$13.1 million in the previous year, while retaining a working capital of N$420 million. After settling long-term debts, the group retained N$87 million in cash at the end of the financial year.
Capital spent came to N$47.8 million, adding to an investment up to N$189.5 million over the past three years, which was for the upgrading and expanding infrastructure.
The general scarcity of water has prompted Meatco to make some strategic changes, in response to the uncertainty of water supply in the future, and the risks it would pose for production.
Because the Windhoek Municipality could guarantee water supply to the Windhoek factory, while the Okahandja Municipality could not, Meatco decided to close its operations in Okahandja and run the Windhoek factory at full capacity.
“Even though Meatco’s revenue decreased during the reporting period, due to fewer cattle slaughtered, Meatco’s long-term strategy to add value to its products and market it to niche, high-value markets in the international arena, still enables it to maximise returns to producers. The water crisis prompted Meatco to think and work smarter,” the report explained.
The Okahandja factory was converted into a cold storage facility, enabling Meatco to reroute 70-80 percent of its products via Walvis Bay.
Operating a single factory produced a saving of 33 percent of Meatco’s total water consumption, thereby lowering costs. The cost of water is a substantial component in its overall operating costs.
Broadening Meatco’s basket of products
Meatco exports to the European Union (EU), the United Kingdom (UK), Norway and South Africa, and new markets in the United States, China and Hong Kong have recently been cleared. The EU, UK and Norwegian markets account for 43.2 percent of Meatco’s sales by volume, while South Africa and Namibia make up 55.72 percent.
Namibia accounts for 31.7 percent of that volume, while the balance of 24.02 percent, comes from South Africa. It is notable that the bulk of sales in Namibia are offal products, while in South Africa it is mostl y beef used for manufacturing of meat products.
However, international markets account for 75.41 percent of the value of the corporation’s sales, while South Afr i c a and Namibia combined accounted for 22.9 percent. Namibia accounts for 10.62 percent and South Africa for 12.28 percent of the combined value.
“Clearly, these markets are vitally important to Namibian producers. Fortunately, despite the drought in Namibia and its effect on the availability of feed, Meatco managed to maintain the prices of its products, and even affect a slight increase in price, year-on-year, across all its markets. The difference in the markets, that Meatco’s prime cuts are exported to the EU, UK and Norway, while Namibia and South Africa purchase the low-price cuts, is essential,” notes the report.
Suspended Meatco Chief Executive Officer, Advocate Vekuii Rukoro, said that the corporation’s motivation in achieving its goals remained consistent, with its ultimate goals being to produce and export high quality products to a growing international market, while ensuring that its customers know that its cattle is sourced ethically and processed to the highest safety standards.
“ I t is essential to reward producers for their hard work, without which the corporation could not achieve these goals,” he said in the report.
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