Drought affected Meatco operations

Last year’s drought had a significant impact on Meatco’s operations because of poor quality cattle that were delivered to its abattoirs. However, despite these challenging operating and marketing conditions due to the drought during the previous financial year, Meatco still managed to pay commercial farmers an average producer price of N$25.30/kg, which was N$2.66/kg higher than the equivalent South African price. In total, Meatco paid N$70.3 million above South African prices in 2013/2014. Meatco’s revenue increased by 2%, from N$1.38 billion to N$1.41 billion, in the year under review. Of this, 63.1% went to producers, 18.8% to suppliers, 15.2% to salaries, 2.4% to financiers, 0.3% to reserves and 0.2% to the government. The company also managed to generate enough profit to make provision for a N$29.6 million back pay to farmers who supported Meatco during the 2013/2014 financial year and will bring the total premiums above South African prices to almost N$100 million for the year under review. This was announced at Meatco’s annual general meeting that took place on Friday at the Wanderers Sports Club in Windhoek. The AGM was attended by about 100 Meatco stakeholders who included the Meatco Board, Meatco producers and Meatco staff members. According to Meatco CEO Vekuii Rukoro, the drought was the single biggest factor that influenced Meatco’s business. Meatco slaughtered 116 912 cattle in 2013/14 compared to 107 186 the previous year, but the average carcass weight decreased by 6% south of the veterinary cordon fence and by 8% north of the veterinary cordon fence. The drought had a significantly negative effect on the number of on-the-hoof cattle exported to South Africa because farmers had to send cattle to markets sooner due to the bad grazing conditions. This deprived local abattoirs of operating at higher capacities. In 2013/14 a total of 271 000 cattle were exported on the hoof, a dramatic increase of 280% compared to the 132 5000 exported in 2012/13. Of the total number of cattle sent to all markets 52.8% were exported on the hoof to South Africa while Meatco slaughtered only 26.7%. Rukoro said Meatco renewed its focus and energy on backwards integration initiatives to fill the cattle supply gap. Of the animals that were slaughtered at Meatco, 23 864 came from the Okapuka feedlot, 5 762 came from Meatco’s ‘veldlotting’ initiative and 8 490 came from the Meatco-owned cattle initiative. That means 30% of cattle slaughtered at Meatco in the review year came through the backwards integration channels.