The Meat Corporation of Namibia (Meatco) held its Annual General Meeting (AGM) on 27 June 2014 at the Wanderers Sports Club in Windhoek.

The Chairperson of the Board, Ms. Martha Namundjebo-Tilahun, welcomed all stakeholders present after which the Chief Executive Officer (CEO), Adv. Vekuii Rukoro, gave an overview of the business during the 2013/14 financial year, followed by the Chief Financial Officer (CFO), Nico Weck, who gave a synopsis on how the company performed financially during the year under review.

Despite challenging operating and marketing conditions due to the drought in the last financial year, we were able to pay producers an average producer price of N$25.30/kg, which was N$2.66/kg higher than the equivalent South African prices. In total, Meatco paid N$70.3 million above South African prices in 2013/2014.

Our revenue increased by 2%, from N$1.38 billion to N$1.41 billion in the year under review, of which 63.1% went to producers, 18.8% went to suppliers, 15.2% went to salaries, 2.4% went to financiers, 0.3% went to reserves and 0.2% to the Government.
Although the company faced a difficult year, we managed to generate enough profit to make provision for a N$29.6 million back pay to be paid to producers who supported Meatco during the 2013/2014 financial year and will bring the total premiums above South African prices to almost N$100 million for the year under review.

Our operating costs increased by only 11.1%, which is a notable achievement given the significant increases in the cost of water and electricity over the last year.

In his speech and commentary in the company’s annual report, Adv. Rukoro said that without a doubt, the drought had the biggest influence on business in 2013, with Meatco having been faced with very poor quality cattle delivered to the abattoirs.

Meatco slaughtered 116 912 cattle in the year under review compared to 107 186 the previous year, but the average carcass weight decreased by 6% South of the Veterinary Cordon Fence and by 8% North of the Veterinary Cordon Fence. The result was that the volumes sold in kilograms remained very much the same this year compared to last year.

“Because of the difficulties the organization was facing, as a result of a decade of declining cattle numbers, we had to take drastic measures to ensure Meatco’s survival and long term sustainability. We implemented a policy to either turn around business units that were making a loss or to close them down. The result was the closure of our sheep processing operations and a decision to scale down our cattle operations to match the amount of raw material coming to us. It was a difficult time,” Rukoro said.

“We also realized that managing the cost side of the business is not enough,” he added, “and that we need to secure more cattle if we want the business to be sustainable and to grow.”

To this end Meatco renewed its focus and energy on backwards integration initiatives to fill the cattle supply gap. Of the animals that were slaughtered at Meatco, 23 864 animals came from the Okapuka feedlot, 5 762 came from Meatco’s veldlotting initiative and 8 490 came from the Meatco-owned cattle initiative. That means 30% of cattle slaughtered at Meatco in the review year came through the backwards integration channels.

“Integrating more closely in the value chain does not just mean integrating backwards. We are also integrating forward, moving closer to the end consumer with our product to extract more value from the chain. To this end we have recently acquired 25% shareholding in the GPS food group. GPS has been helping us to market our product in international markets and to build our Natures Reserve brand for the last couple of years, to such an extent that we are realizing some of the best prices in the world for our product,” he said.

A key component in remaining competitive in the international market, is a tightly integrated value chain – from the farm all the way to the fork and maintaining our niche position in the market.  This globally competitive approach is very similar to where we are headed to improve our competitiveness at Meatco and we are doing it in partnership with, and for the benefit of, farmers.

The goal is to take control of all areas of the value chain, from cattle supply to operations to the markets. “The aim is to ensure a sustainable and profitable Meatco in the long-term while delivering maximum returns to our stakeholders. We have made good progress in this regard,” he said.

An issue that still remains unresolved is the ownership status of the business. The Meatco Board and Management have reached out to Government with regards to the resolutions taken at our AGM last year and we are still awaiting feedback.

“We have been active in expanding our existing markets both nationally and internationally. Our plight for a more equitable allocation of the Norway quota to the benefit of the vast majority of Namibian livestock producers was finally heard by government and the result is 75% of the re-allocated quota coming to Meatco. This allows us to put more product into the Norwegian market and I believe the benefits are currently being felt by all producers,” he said.

“Last year I asked you to give me just one year to affect the type of changes that I wanted to bring about. Today, the feedback is this – we are making excellent progress. We have a stronger, more secure supply of cattle to Meatco coming from our trusted producers and our producer partners in backwards integration. We have more cost-effective and efficient operations after re-aligning our business and increasing efficiencies at all our plants. We are able to unlock further value in our markets and secure our position there, by integrating forward. These actions have solidified our position in the livestock industry, and allow us to keep the livestock market stable and even grow it, which is to the benefit of all producers,” he added.

“Part of my core message during the past year is that Meatco does not exist for itself, we exist for the producers. We need to realise that our business success in the meat industry, both for Meatco and the producers, is dependent on each other. We need a common vision, with common goals to gain the most from each other’s strengths. A culture of partnership is what is called for. Personally, I look forward to fostering this relationship with you over the next few years,” Adv. Rukoro concluded.