Beefcor surpasses Meatco in cattle slaughtered
Private meat processor Beefcor has surpassed state-funded Meatco in terms of the number of cattle slaughtered.
Agriculture minister Calle Schlettwein revealed this development in Swakopmund this week, where a ministerial strategic and annual planning workshop is being held.
He did not reveal the slaughtering figures for either entity, but Namibian Sun understands Beefcor planned to double its throughput to 60 000 by 2024.
Meatco earlier this year said its goal is to slaughter 50 000 cattle in the 2023 financial year. The company slaughtered 35 000 cattle during the 2021/2022 financial year, while Beefcor’s 2022 throughput was projected to hover around 30 000.
Savanna Beef, another private operator, has also been registered, which according to Schlettwein will pose further competition to Meatco.
Meatco needs to slaughter at least 60 000 to 65 000 cattle to be profitable and to operate the Windhoek abattoir.
Technically insolvent
Schlettwein said Meatco is currently technically insolvent with its debts having surpassed its assets.
According to him, the company has therefore been identified as one of the ministry's priority areas that need intervention.
It is important for the ministry to support the reform and sustainability of Meatco as an anchor for market access and a price stabiliser for all livestock producers - small and large - in both communal and commercial areas, he said.
“We are working closely with the treasury and stakeholders for a sustainable future for Meatco and its value-creation proposition of the livestock sector.”
He added that the company initially had the advantage of being a de facto monopoly, but this situation has changed since market forces made the opening of privately-owned abattoirs and beef-marketing entities possible.
“The result is a sharp decline in market share, which - in turn - brought about serious loss-making.”
In the ICU
Earlier this year during his annual staff and stakeholder address, Schlettwein said Meatco is still in the intensive care unit (ICU) and a decision must be taken on whether to terminate life support, or breathe new life into its structures.
“In the commercial sector, what we see is that Meatco - as the biggest abattoir – has, to a certain extent, failed the farmers, and they have now taken it into their own hands and are developing their own abattoirs.”
Reacting to Schlettwein’s comments, Namibian agricultural expert Wallie Roux said: “Meatco rested on its monopoly laurels. This brought about ineffectiveness and damaged producer confidence”.
According to him, private entities are more effective.
“They, for instance, pay oriented prices and they pay on time. You can take a look at Meatco’s previous annual reports, it speaks volumes about how the entity shrunk while its expenses increased. Therefore, it is technically bankrupt,” Roux said.
Comes at a cost
Meatco last year pointed out that it has managed to reduce historical loans of N$94 million owed to Bank Windhoek and N$520 million owed to First National Bank Namibia.
However, N$400 million owed to the Development Bank of Namibia (DBN) is still outstanding.
“They paid off debt by making other debts. That DBN loan comes at a cost. It is written up in your books as a debt. That is why the minister is saying recovery of own resources and current structures in place is highly unlikely,” he said.
“Red lights flashed a long time ago when you are making one debt to pay other debt. The question is how such a situation arose, despite all of government’s support. The answer lies [at the feet] of the management and the board,” Roux added.
“The current management drove Meatco into the ground. Their expenses just got more and their income declined. There’s the entire Okahandja [abattoir], closed. There’s the cannery, closed. Slaughtering is only picking up now because it is the beginning of a drought.”
Roux said despite Beefcor producing more than Meatco, the Norwegian beef quota allocation was 1 200 tonnes to Meatco and 400 tonnes to Beefcor.
“That was again a type of lifeline they threw to Meatco.”
Agriculture minister Calle Schlettwein revealed this development in Swakopmund this week, where a ministerial strategic and annual planning workshop is being held.
He did not reveal the slaughtering figures for either entity, but Namibian Sun understands Beefcor planned to double its throughput to 60 000 by 2024.
Meatco earlier this year said its goal is to slaughter 50 000 cattle in the 2023 financial year. The company slaughtered 35 000 cattle during the 2021/2022 financial year, while Beefcor’s 2022 throughput was projected to hover around 30 000.
Savanna Beef, another private operator, has also been registered, which according to Schlettwein will pose further competition to Meatco.
Meatco needs to slaughter at least 60 000 to 65 000 cattle to be profitable and to operate the Windhoek abattoir.
Technically insolvent
Schlettwein said Meatco is currently technically insolvent with its debts having surpassed its assets.
According to him, the company has therefore been identified as one of the ministry's priority areas that need intervention.
It is important for the ministry to support the reform and sustainability of Meatco as an anchor for market access and a price stabiliser for all livestock producers - small and large - in both communal and commercial areas, he said.
“We are working closely with the treasury and stakeholders for a sustainable future for Meatco and its value-creation proposition of the livestock sector.”
He added that the company initially had the advantage of being a de facto monopoly, but this situation has changed since market forces made the opening of privately-owned abattoirs and beef-marketing entities possible.
“The result is a sharp decline in market share, which - in turn - brought about serious loss-making.”
In the ICU
Earlier this year during his annual staff and stakeholder address, Schlettwein said Meatco is still in the intensive care unit (ICU) and a decision must be taken on whether to terminate life support, or breathe new life into its structures.
“In the commercial sector, what we see is that Meatco - as the biggest abattoir – has, to a certain extent, failed the farmers, and they have now taken it into their own hands and are developing their own abattoirs.”
Reacting to Schlettwein’s comments, Namibian agricultural expert Wallie Roux said: “Meatco rested on its monopoly laurels. This brought about ineffectiveness and damaged producer confidence”.
According to him, private entities are more effective.
“They, for instance, pay oriented prices and they pay on time. You can take a look at Meatco’s previous annual reports, it speaks volumes about how the entity shrunk while its expenses increased. Therefore, it is technically bankrupt,” Roux said.
Comes at a cost
Meatco last year pointed out that it has managed to reduce historical loans of N$94 million owed to Bank Windhoek and N$520 million owed to First National Bank Namibia.
However, N$400 million owed to the Development Bank of Namibia (DBN) is still outstanding.
“They paid off debt by making other debts. That DBN loan comes at a cost. It is written up in your books as a debt. That is why the minister is saying recovery of own resources and current structures in place is highly unlikely,” he said.
“Red lights flashed a long time ago when you are making one debt to pay other debt. The question is how such a situation arose, despite all of government’s support. The answer lies [at the feet] of the management and the board,” Roux added.
“The current management drove Meatco into the ground. Their expenses just got more and their income declined. There’s the entire Okahandja [abattoir], closed. There’s the cannery, closed. Slaughtering is only picking up now because it is the beginning of a drought.”
Roux said despite Beefcor producing more than Meatco, the Norwegian beef quota allocation was 1 200 tonnes to Meatco and 400 tonnes to Beefcor.
“That was again a type of lifeline they threw to Meatco.”
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