Published March 05, 2012 08:10
Meatco was able to pay producers the highest average price per kilogram in the history of the company during the 2011/2012 financial year. What makes this even more significant is the fact that Meatco achieved this with a lower volume of cattle, i.e. less product to market, than in the previous financial year.
According to unaudited results, Meatco extracted enough value from its markets to offset the year-on-year cattle decline of roughly 10 000 heads of cattle for 2011/2012 and pay producers a little over 18% more than the previous financial year. Producers received an average price per kilogram of N$24.58 during the period under review which totals about N$24 million above the equivalent South African producer price.
This achievement was only possible because of the current Meatco business model which was developed over recent years. “The Meatco of six years ago would not have survived with this severely low cattle throughput,” says Kobus du Plessis, Chief Executive Officer of Meatco. “We are able to pay producers more for less cattle because we have positioned ourselves very favourably with regards to international market demands and have developed the capabilities of our business to service these markets.”
Jannie Breytenbach, Meatco’s Senior Manager for Factories says, “Our production planning has changed significantly. In the past we would produce a product and keep it in cold storage until a decision was made to release it into some market. This would be wholesale, bulk products. Now, when a slaughter-ready animal enters our premises we already know exactly which specific cuts we need from it and to which specific client those cuts are going.”
Meatco’s marketing efforts have also evolved with a strong focus on the customer and value-addition. The differentiation of Meatco’s product through the development of the Natures Reserve brand in international markets contributed significantly to the company’s recent success. This new consumer-orientated approach in producing and marketing Meatco’s product moves away from the wholesale approach, further down the value chain toward the retail end. Not only does this allow Meatco to create a lot of extra value through branding and differentiating its product on retail shelves, but it allows for the removal of intermediaries in the value chain to create even more extra value for Meatco and its producers.
A major challenge for Meatco however, is the ever decreasing cattle numbers being delivered to its abattoirs for slaughter. This is exacerbated by shortcomings in industry regulation and most recently issues with the implementation of the Namibian Livestock Identification and Traceability (NamLITS) system which saw the sharp drop in cattle slaughtered Meatco’s EU export abattoirs.