Drought affects sheep exports

The unavailability of slaughter-ready sheep (16kg and above) is one of the factors that contributed towards the 4.7% reduction in sheep slaughtered at the export abattoirs between January and May this year.

The quality of the sheep desired by export facilities in terms of their weight and conformation had been greatly affected by the continuous drought in some of the predominantly sheep producing areas.

In total, 31,110 sheep were slaughtered at the B&C class abattoirs translating into a 9% share of the market whereas live exports took the bigger chunk of 53% compared to 39% of sheep slaughtered at the export abattoirs.

Lamb exports were reported to be higher due to the increase in demand and strong competition from the Republic of South Africa (RSA) markets. Competing price differences between Namibia and the Northern Cape have increased at an alarming rate.

Despite operating in the same markets as their counterparts, a marginal decline at Namibian abattoirs can be observed over the last 11 weeks. The lowest price difference thus far is observed in week 28, which stands at N$3/kg, a marginal improvement compared to the previous differences, which stood at an average of N$8 this year.

The oversupply of mutton, coupled with poor quality, suppressed demand at Namibian abattoirs, which resulted in the lower prices offered at the Namibian abattoirs.

At current carcass weights, the highest price difference recorded in week 22 stood at N$10.67.

Delayed payments by importers as a result of the current financial crisis also threaten the cash flow of the producers and this negatively impacts the entire production process. Producer prices are expected to remain sideways for the second quarter of 2017.

The slaughter industry will, however, be under pressure as a result of herd rebuilding after the herd liquidation during the 2014/2015 drought years. Producers in the south do not have sufficient feed available for their livestock after less than average rains this year.

The strenuous grazing conditions coupled with severe penalties on fat grade, weight (below 16kg) and conformation ranging between N$7-10/kg, will cause mutton markets to retain the current momentum. This in itself is a significant amount that producers experienced.

To address this problem amicably, the standing drought arrangement of the too lean and too small still stands. Therefore producers that are affected are encouraged to export under this arrangement as per the standard operating procedures.

Continuous efforts are made to address the duration of VAT claim payments with the receiver of revenue. The aim is to improve the cash flow of abattoirs and simultaneously address the issue of delayed payments to producers.

The A2 and C2 sheep price differences between Namibia and the Northern Cape increased from N$5/kg � N$10/kg.

Source: New Era Newspaper Namibia