Farmers Urged to Be Business-Minded

Namibian beef farmers must work together to achieve a competitive aantage for Namibia as a cattle producer and beef exporter.

“We should not throw away what we have already achieved. Our animal health status and traceability must be maintained, strengthened, respected and supported,” said Meatco Chief Executive Officer, A Vekuii Rukoro. He said that vertical integration was needed to extend Namibia’s competitive aantage.

He cited the lifestyles of some cattle producers, whose standards of living had overtaken levels of certain farmers but instead of addressing the short coming in their farming businesses, tend to blame abattoirs or other players in the beef producton chain.

“We should ask ourselves a few honest questions. For example, is it necessary to farm with a Land Cruiser if you cannot afford to maintain your camps on the farm? Is it perhaps that we have never thought of doing things differently?” he asked.

Asked how Namibia as a cattle producer can maintain a competitive aantage, Rukoro said: “I do not think we have a competitive aantage. I think we are in a position where we should look at how we can obtain a competitive aantage, instead of asking how we can maintain it.”

To go about obtaining a competitive aantage, Rukoro says the answer lies in the industry coming together and adopting a joint vision for beef production.

“We should see Namibia as one actual beef producer one value chain a unit with sections. All stakeholders should have a single vision and support each other through the process, right from the farm to when the animal is finally marketed,” he stresses.

Rukoro points out that participants within the industry still blame one another whenever problems are experienced in the cattle production chain, instead of banding together to find a solution.

“In Meatco’s case, vertical integration means that the producer should own the cattle value chain up until the point where it reaches store shelves. This means they should own the farm, the production system, the abattoirs and the marketing channels. Through this, the chain will become more cost effective, because there will be less middle-men involved. At the end, more value will find its way back to the producer’s pocket. This is also what we argue with our approach to the Meatco ownership,” he said.

“Meatco – as an abattoir section in the chain – tries to manage costs efficiently. We adjusted our factory capacities to accommodate the burden of overcapacity and are always looking at ways on how to do business more cost effectively.”

He added that cost efficiency was not only a problem on farms.

“Somewhere in the Namibian cattle value chain, we lose money because we buy and sell the same animals over and over,” he said. For example, a weaner producer pays transport costs, commission and a Meat Board levy to sell his animal at an auction. Then the buyer pays for transport to get the animal to his farm where he raises it to a certain stage before he takes it to auction again. He then pays transport costs again, as well as a commission and a Meat Board levy on that same animal. The buyer at the auction yet again pays transport costs to get the animal to his farm, where he raises the animal until it is slaughter-ready. Then that same animal is transported back to an auction, and commission as well as a Meat Board levy to sell the animal, is paid yet again. Then another buyer transports the animal to his farm to stand for 40 days, before he transports it to the abattoir, and another Meat Board levy has to be paid.”

“At the end of the day, with all the commission, transport and Meat Board levies, an animal that was supposed to cost N$3 500 to produce costs closer to N$10 000. It completely swallows up the value which is supposed to go to the Namibian producer. In a joint chain, with one vision for Namibia’s cattle production, we can unlock this lost value for producers,” Rukoro observes.

“With one vision and one plan of action, we will realise more value out of the whole chain, and at the end of the day, the producer will be the winner,” he said.

Source : New Era