Meatco undersells meat by N$4bn
Cash-strapped beef parastatal Meatco undersold its export meat products by a massive N$4 billion between 2018 and 2023, according to the Bank of Namibia (BoN).
During this five-year period, its local competitors who sell meat to the same markets raked in billions of dollars and continue to be financially sound, while Meatco relies heavily on government bailouts because it cannot fund its own operations.
The situation is so dire that Meatco’s subsidiary in the United Kingdom (UK) is under liquidation.
A BoN analysis shows that during this period, Meatco could have received approximately N$6.1 billion instead of N$2.1 billion for the meat products it exported.
“This can easily absorb the losses incurred by Meatco over the last [five] years between 2018 and 2023, amounting to N$636 million.”
The analysis by the central bank was conducted on request of public enterprises minister Ipumbu Shiimi to investigate the underselling of Meatco products and potential revenue opportunities for the company.
Under-declared
In those five years, Meatco has exported 53.3 million kilograms of meat, making revenues of N$2.1 billion.
“This revenue is significantly under-declared by N$4 billion, in comparison to Meatco’s Namibian competitors who export meat to the same market using a conservative market rate.”
The bank said during the period under review, Meatco took up 73% of the market share of meat exports, yet received less than 50% of returns compared to revenues made by its main local competitors.
For instance, on average, Meatco priced meat per kilogram to Norway at N$48.12, while new local market player Beefcor Meat’s supplies are priced at N$154.34 per kilogram. Farmers Meat Market sold its meat at N$211.22 per kilogram.
Meatco’s price per kilogram in New Zealand was N$45.52, while Beefcor’s price was N$109.11.
In South Africa, Meatco’s beef is sold at N$31.93 per kilogram, Farmers Meat Market charges N$68.67 and Hartlief priced its product at N$76.08.
With regards to the United Kingdom, Meatco priced beef exports at N$44.69 per kilogram and Beefcor priced its products at N$71.43.
Significantly lower
“We further noted that Meatco has a marketing agency, GPS Food Group, which is also an importer of meat from both Meatco and its competitors in Namibia.”
The bank said the agency specifically markets Beefcor, whose exports to GPS amounted to 1.2 million kilograms, with a value of N$173 million sold to Norway.
In this respect, the data showed that the price at which Meatco’s beef is exported by the marketing agency is significantly lower than the price charged by its competitors who use the same agency, it said.
“During the 2022 financial year, the turnover for GPS was estimated at N$4.2 billion annually in the UK, compared to the turnover of Meatco’s UK subsidiary at N$10.8 million.”
GPS also imports meat from Brukarros Meat Processors.
During the period under review, GPS imported four million kilograms of beef valued at N$164.8 million, while the beef transactions for Brukkaros were 209 000 kilograms, valued at N$3.9 million.
The bank said Meatco’s UK subsidiary has over the period imported 10 million kilograms of meat, valued at N$492 million.
“The prices per kilogram are significantly less compared to competitors such as Beefcor.”
Suspicious
According to the BoN document, Namibia Meat Import and Export is a subsidiary of Meatco in South Africa and imported 15 million kilograms of meat valued at N$487.5 million for the period.
“Their transactions also reflect under-declarations and further reconciliations by the auditors or forensic auditors could be warranted.”
It said it is suspicious that GPS makes an annual turnover of N$4.1 billion while Meatco makes losses, adding that the company’s UK subsidiary is consequently under liquidation.
In October 2023, Meatco owed commercial farmers N$320 million for cattle delivered to its abattoirs. The capital bill has since been settled, but Meatco has not been able to pay interest on such debt – a situation that has infuriated producers.
Efforts to reach Meatco CEO Mwilima Mushokabanji for comment proved futile.
During this five-year period, its local competitors who sell meat to the same markets raked in billions of dollars and continue to be financially sound, while Meatco relies heavily on government bailouts because it cannot fund its own operations.
The situation is so dire that Meatco’s subsidiary in the United Kingdom (UK) is under liquidation.
A BoN analysis shows that during this period, Meatco could have received approximately N$6.1 billion instead of N$2.1 billion for the meat products it exported.
“This can easily absorb the losses incurred by Meatco over the last [five] years between 2018 and 2023, amounting to N$636 million.”
The analysis by the central bank was conducted on request of public enterprises minister Ipumbu Shiimi to investigate the underselling of Meatco products and potential revenue opportunities for the company.
Under-declared
In those five years, Meatco has exported 53.3 million kilograms of meat, making revenues of N$2.1 billion.
“This revenue is significantly under-declared by N$4 billion, in comparison to Meatco’s Namibian competitors who export meat to the same market using a conservative market rate.”
The bank said during the period under review, Meatco took up 73% of the market share of meat exports, yet received less than 50% of returns compared to revenues made by its main local competitors.
For instance, on average, Meatco priced meat per kilogram to Norway at N$48.12, while new local market player Beefcor Meat’s supplies are priced at N$154.34 per kilogram. Farmers Meat Market sold its meat at N$211.22 per kilogram.
Meatco’s price per kilogram in New Zealand was N$45.52, while Beefcor’s price was N$109.11.
In South Africa, Meatco’s beef is sold at N$31.93 per kilogram, Farmers Meat Market charges N$68.67 and Hartlief priced its product at N$76.08.
With regards to the United Kingdom, Meatco priced beef exports at N$44.69 per kilogram and Beefcor priced its products at N$71.43.
Significantly lower
“We further noted that Meatco has a marketing agency, GPS Food Group, which is also an importer of meat from both Meatco and its competitors in Namibia.”
The bank said the agency specifically markets Beefcor, whose exports to GPS amounted to 1.2 million kilograms, with a value of N$173 million sold to Norway.
In this respect, the data showed that the price at which Meatco’s beef is exported by the marketing agency is significantly lower than the price charged by its competitors who use the same agency, it said.
“During the 2022 financial year, the turnover for GPS was estimated at N$4.2 billion annually in the UK, compared to the turnover of Meatco’s UK subsidiary at N$10.8 million.”
GPS also imports meat from Brukarros Meat Processors.
During the period under review, GPS imported four million kilograms of beef valued at N$164.8 million, while the beef transactions for Brukkaros were 209 000 kilograms, valued at N$3.9 million.
The bank said Meatco’s UK subsidiary has over the period imported 10 million kilograms of meat, valued at N$492 million.
“The prices per kilogram are significantly less compared to competitors such as Beefcor.”
Suspicious
According to the BoN document, Namibia Meat Import and Export is a subsidiary of Meatco in South Africa and imported 15 million kilograms of meat valued at N$487.5 million for the period.
“Their transactions also reflect under-declarations and further reconciliations by the auditors or forensic auditors could be warranted.”
It said it is suspicious that GPS makes an annual turnover of N$4.1 billion while Meatco makes losses, adding that the company’s UK subsidiary is consequently under liquidation.
In October 2023, Meatco owed commercial farmers N$320 million for cattle delivered to its abattoirs. The capital bill has since been settled, but Meatco has not been able to pay interest on such debt – a situation that has infuriated producers.
Efforts to reach Meatco CEO Mwilima Mushokabanji for comment proved futile.
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