Drought forces farmers to sell livestock

By Hilary Mare

THERE is an increase in slaughtering of cattle at export abattoirs due to drought conditions forcing farmers to bring their livestock herd to manageable levels, the Meat Board has said.

The board recorded an overall increase in the total marketing of cattle between the months January and June 2019 with livestock exports increasing by 10.91% and export abattoirs driving the performance at a 55.35% growth rate on account of drought-induced marketing.

“From total cattle marketed, 65% were live exports, 28% were taken up by export abattoirs while B&C class abattoirs only enjoyed a 7% of the market share,” the Meat Board said.

Butchers on the other hand experienced a decline of 27.75% losing market share to export abattoirs whose producer prices remained competitive during the second quarter.

Although weighted average capacity utilisation of export abattoirs for the first quarter stood at 85.99% it is worth noting that Meatco registered a 104.98% monthly capacity utilisation during the second quarter of 2019, indicating over-capacity utilisation.

“Foot and mouth disease conditions in major trading partner South Africa forced South African feedlots to reduce their purchase of Namibian weaners as they did not have a market for their beef. This resulted in a significant reduction of weaner exports in the first quarter but the second quarter recorded a recovery in live exports. Beef export abattoirs performed very well reaching unusual levels of capacity utilisation. Despite increased supply, abattoir prices remained at competitive levels,” the Meat Board also said.

On the other hand, the long term sheep marketing trend continues to depict a gradual reduction.

Rather than registering a significant growth, the sector mainly experienced a reallocation of the almost same number of sheep marketed last year between competing market segments. Price differentials between Namibia and South Africa caused a shift from local slaughtering to live exports. Towards the end of the second quarter, the Meat Board of Namibia introduced amendments to permit conditions in an effort to address price inequities.

“During the first half of 2019, sheep marketing stabilised close to 2018 levels registering only a nominal increase. Major shifts in market share were experienced with producers moving their sheep more towards live exports to the detriment of local slaughter facilities. The Meat Board of Namibia introduced new permit conditions to allow the live export of sheep in circumstances where local export abattoirs fail to meet the benchmark price difference of –N$2.50/kg. Sheep price differences remain high in the A2 and C2 class and Namibian prices are expected to remain under pressure due to the drought phenomenon,” added the Meat Board.

In the pork sector, the Board noted that the Pork Market Share Promotion Scheme is in place to protect the Namibian producers from the surge of cheap imports.

The board added that there is currently only one big pork producer in the country. The Pork Market Share Promotion Scheme is due to end in 2019. Statistics indicate that further protection is still required to put local producers on a strong footing and to make the industry viable and competitive in the long-run.

“The Pork Market Share Promotion Scheme remained effective in keeping a healthy ratio of Namibian pork consumption in favour of local producers. The ceiling price of pork declined following decreases in the RVAV pork prices to which the Namibian pork prices are linked. Given the persistence of high barriers to entry in the pork industry, it is logical to extend the Scheme further in order to consolidate the gains achieved in pork market share thus far,” explained the Meat Board.