The impact of Covid-19 on Meatco markets and returns

21 Aug 2020

The outbreak of the Coronavirus pandemic affected Meatco like most other businesses. However, because Meatco was declared an essential service in Namibia, under the State of Emergency Regulations, the impact was reduced tremendously.

Amid the outbreak, Meatco could export its products to international clients with minimal delays because of the enabling flow at the harbours. 

According to Meatco,  it reports that there were slight delays in exports to the Chinese market because of their systems, which Meatco managed to mitigate with no negative business implications.

customers worldwide experienced challenges because of Covid-19, such as the travel prohibition that affected the tourism sector including the hospitality (HoReCa) industries, which consume most of Meatco’s high-value beef products.

Although consumers continue to eat, the reality is that what we consume at restaurants and what we consume at our private dwellings differs tremendously. This change in consumption patterns disrupted the balance that we require to arrive at the maximum value out of a carcass that Meatco purchases from farmers. Consequently, maintaining the balance on returns from our carcasses remains the biggest challenge.

This was the same in all markets be it Namibia, South Africa, Norway or the United Kingdom because Covid-19 affected the world alike. Meatco’s challenge now remains that of selling high-value cuts produced at premium prices.

However, looking at the markets separately, the UK market statistics indicate a shift in consumption patterns to high-value cuts because of consumers who are more health-conscious attributed to the stay at home policies implemented which subsequently, increased home-cooked meals exponentially. “This change in trend contributes immensely to the balance that we are currently strategising to maintain.

The Norwegian market remains Meatco’s premium market regardless of the current unfavourable economic trading patterns. This is because of returns that are disproportionate to our other markets. Besides Covid-19, the general slowdown in oil prices and that of most world economies also negatively affected Norway as a predominately oil-based economy. This means the value paid for our products slightly decreased, although we still managed to derive high maximum returns due to a weakening in the South African rand.

However, sees a light at the end of the tunnel as carcass prices across Europe are normalising. According to Mouton, this indicates an improvement in the expected price yields going forward. Unfortunately, Meatco also do not foresee significant changes in most of the currencies this year with the Namibia Dollar remaining quite weak due to the risk associated with investing in South Africa, its current economic status and world’s economic outlook. Despite this, the overall future expectations from Meatco’s markets do look positive.

After the Coronavirus was recently detected on the outer packaging of imported Ecuadorian Shrimp, the Chinese authorities concluded that Covid-19 is transmitted through packaging material and have increased the inspection of plants that export to that country worldwide. Meatco underwent an extensive virtual Covid-19 audit and passed it exceptionally. This indicates that it is indeed costly doing business with the Chinese, however, it is worthwhile as China is the world’s largest consumer market of beef and imports both bone-in-beef cuts and offal that deliver higher returns.