Meatco’s NCA Subsidiary operations
04 Sep 2020
Carcasses from Bonanza Oshakati an operation which is part of Meatco's NCA Subsidiary
According to Meatco, the Chief Executive Officer of Meatco’s Northern Communal Area Subsidiary (Pty) Ltd, has come up with short-term turnaround strategies to ensure the viability of business operations in the Northern Communal Area (NCA).
Since assuming the position of CEO of the Meatco Subsidiary, having inherited a loss-making operation, had to understand the business environment, and identify the factors contributing to the losses realised.
The CEO needed to find out what exactly they can do to turn the situation around. By developing the Meatco NCA strategic policy. One issue identified was that the current operation has market access limitations. Second, there is no market for the hind-quarter products, which produce high-value yields compared to the current NCA fore-quarter products market. This current arrangement is not helping Meatco because hind-quarter products yield higher returns.
Because of all these issues, the CEO and his team came up with short-term turnaround strategies to create a more viable business operation such as:
Improving the market share from slaughtering 32 animals per week to slaughtering 80 animals per week.
Deal with the quality of the animals to better compete in that market (focus on AB and B grades and establishing Backgrounding initiatives).
Cut costs within the system, mainly on transportation and administrative costs.
Ensure product diversification because although there is a good market for fore-quarter products in the NCA, it is highly sensitive because of the margins that are small, as many suppliers operate in this high-volume market.
Increase the sale price of the offal products to get maximum value from this high-volume product which Meatco now sells as a fresh product.
To make profits, the company needs to increase yields for the hind-quarter products and get higher returns through product diversification. “We are trading at approximately 1-2% of the hind-quarter sales while the desired amount is 5%. Reaching 5% will balance our business model through the increased yields.
Current Meatco NCA operations are the Mobile Slaughter Unit (MSU) and Bonanza Oshakati. Meatco NCA slaughters the cattle at the MSU and transports the carcasses to Bonanza for deboning and value-addition, and sale of the meat products. The operations in NCA are been utilised to lay the foundation of the envisaged operations of the Rundu abattoir, which is expected to be complete by first quarter of 2021. Awareness have been created on the NCA Meatco Strategy and further engagement with all stakeholders is expected before the end of the year in the NCA.
The subsidiary’s mandate is to have a good functional strategy aimed at unleashing the full potential of the NCA’s livestock marketing sector.