Meatco still evolving after 30 years

01 Jul 2016

Meatco’s 30th Annual General Meeting took place on Friday 24 June 2016. The good news is that the corporation continues to make great strides even under difficult circumstances. The producers’ persistence over the past 30 years despite numerous droughts and other challenges continues to allow Meatco to seek out lucrative markets in order to pay higher prices to producers.

Meatco members and producers at the AGM

Meatco members and producers at the AGM

In her address, Meatco board chairperson Dr. Martha Namundjebo-Tilahun, highlighted the great strides Meatco has made since evolving from the erstwhile Swavleis. Major changes have been realised in the nature of the business, producer demographics, environmental conditions and many other aspects that point to the growth Meatco has undergone – all to continuously provide producers with better markets. Meatco, being a non-profit seeking organisation, paid 62.35% of our beef revenue to producers.

Board appointment
Attending a Meatco AGM for the first time, the Minister of Agriculture, Water and Forestry (MAWF) Hon. John Mutorwa, explained that as the appointing authority, he would execute his duties well before the current Meatco boards’ term ends on 3 October 2016. The election of members of the board of directors was deferred to a date on which a special meeting will be held.

“We will scrupulously go through the necessary motions as per lawful requirements when appointing a full board before the current term expires as required by section 5(3),” Mutorwa said.

As per our mandate, Meatco will continue serving producers in the NCA. Following many consultations and planning, a Mobile Slaughter Unit (MSU) was identified as a solution to serve the NCA market more cost effectively, following the necessary notifications to stakeholders regarding the change in operations.

Mutorwa stated that Meatco’s leadership formally briefed government on the problems facing the organisation in the NCA and the reasons as to why the company was changing the way it was conducting business, namely with the MSU. This means a formal notification was provided to government and the Namibian farmers union.

Mutorwa went on to announce government’s delight at being notified of Meatco’s willingness and readiness to purchase cattle in the Central North, Kunene and NCA, providing that quarantine camps at Omutambo Maowe are availed to house cattle on a temporary basis. Government is receptive to this initiative as it enables farmers to take thousands of animals off the overgrazed land and market them for slaughter through the MSU.

Chief Executive Officer Adv. Vekuii Rukoro repeated the company’s position to serve the producers wherever they find themselves in the country. Rukoro informed members that the new MSU would arrive in Namibia within three weeks, making it possible for communal farmers especially in the NCA, to start marketing their livestock.

Producers wanted to know when the buying of the cattle in the NCA, particularly in the Kunene Region, would begin to which Rukoro replied that this does not depend on the MSU but would begin once the proper arrangements between Meatco and the ministry have been made.

The two hard-hitting droughts have brought about devastating conditions for farmers in Namibia. Consequently, Meatco has adapted its strategy to mitigate these effects and to ensure a consistent flow through the supply chain.

The vital role played by the backward integration strategies was supported by the fact that in 2015/16 Meatco slaughtered 116 948 cattle, of which 32.4% came from our own feedlots and the Meatco Owned Cattle (MOC) initiative, while 67.5% of the cattle came from producers.

In expanding the backward integration strategy, Meatco received an Environmental Impact Assessment (EIA) Certificate from the Ministry of Environment and Tourism for the Annesruh feedlot in the Omaheke Region. The (EIA) Certificate clears Meatco to operate at the feedlot located 15km west of Gobabis.

Water crisis
Primarily due to a crippling water situation, Okahandja abattoir has remained closed since the beginning of the year. “Low cattle numbers and the water levels added to the decision to move operations to Windhoek due to its higher slaughter capacity,” Rukoro said. Meanwhile Meatco is achieving 30% water savings due to consistent saving initiatives at the Windhoek abattoir that allows for greater efficiency for the business across the board.

Business format
Mutorwa is in the process of taking a Bill to Parliament concerning the Meat Industry Act, 1981. Meatco will only have the opportunity to weigh in on the Bill once it has been tabled in Parliament.

After halting farmers’ committee meetings, Meatco reinstated them in a new format. Since then Meatco has hosted successful meetings in Okahandja and Gobabis. However, the organisation has an open-door policy for consultations and discussions with producers.

Communal farmers south of the VCF raised questions as to their value in the business by virtue of membership. As per Meatco Act 1 of 2001 Section 14, all producers that have delivered at least one animal for slaughter directly to Meatco in the past three years, qualify for membership. Furthermore, they are encouraged to follow up through the organised agricultural leadership of the NNFU that can effectively represent the farmers through the proper channels.

For the first time ever an audit partner from PricewaterhouseCoopers provided an opinion on Meatco’s financial statements. The recorded profit for the group is N$13 million with a total revenue growth of 11.9%.

Producers had queries on other income lines and the sustainability of cash flow. Acting group CFO: Bernard Zulch highlighted the importance of cash flow in a meat abattoir, which is the reason why Meatco looks at other facilities, manages cash flow and settles debts as soon as possible to perform a cash conversion cycle.

Producers wanted to know why Meatco pays commission to Meatco UK as a subsidiary. Zulch explained this is simply to fund administrative and sales service operations there.

Former board Chairperson Reinie Rusch

Former board Chairperson Reinie Rusch

A producer and former board member, Udo Duvel, gave a very insightful analysis of the current state of business. He feels primary producers are losing out and that the relationship with the organisation is sometimes strained. Duvel said it was necessary to restore the relationship between Meatco and the primary producer.

During the AGM members voted on various motions that were passed after which Reinie Rusch, who served as Chairperson of Meatco’s Board from 1988 to 2001, shared his experiences of his time with the company. He emphasised that Meatco should continue taking decisions to reach agreeable compromises to steer the company into the right direction.

Meatco board of directors with Hon. Minister John Mutorwa

Meatco board of directors with Hon. Minister John Mutorwa