Farmers on their knees

With increasing feed and input costs and low producer prices, most Namibian farmers will experience financial losses this year, the Namibia Agricultural Union warns.

13 March 2019 | Agriculture

Many industries in the agriculture sector remained under pressure last year, with almost half of these industries experiencing a decline in production value.

Namibia's karakul pelt (Swakara) industry was the hardest hit, with a drastic 32% year-on-year drop in production value from N$45.5 million in 2017 to N$30.7 million in 2018.

Surprisingly, the charcoal industry had the largest increase in production value of 66% year-on-year, from N$184.8 million in 2017 to N$306.7 million in 2018. This is according to the 2018 agricultural review by the Namibia Agricultural Union (NAU).

Cattle (4.3%), sheep (9.1%), poultry (6.8%), dairy (0.8%) and fresh produce (5.1%) showed increased production value. On the flip side, agronomy (-21.7%), grapes (-17.8%), pigs (-6.2%) and goats (-1.5%) experienced a drop in production value.

The NAU warns that the profitability and survival of the local dairy industry is at risk.

The union says in 2017 a bumper harvest in South Africa led to lower feed prices. Nevertheless, fuel-price increases last year increased feed costs. Since feed costs make up 65% of the cost of milk production, any increase or decrease in feed prices has a major impact on the dairy industry.

In 2018 feed costs increased by 72.9% year-on-year and fuel prices increased by 25.7% year-on-year. In addition, milk producers were hit by two 10-cent price cuts in 2018.

As a result, the farm-gate price of milk decreased by 1.8% year-on-year, whereas total expenses increased by 50.9% year-on-year.

“A disproportionate increase in farm-gate price and total expenses negatively influenced the profits received by producers, resulting in a price-cost squeeze of 2.6%. Dairy production has become costly and producers are not realising any profits,” the NAU says.

The union says there is a dire need for stakeholders to come together to save the dairy industry, whose collapse would lead to job losses and have a negative impact on the economy. It says supportive policy measures are required to protect the industry and retailers are urged to support local dairy produce.

The union further says that the beef industry experienced a decrease in cattle prices in the first three quarters of 2018, mainly due to a decrease in weaner prices.

In the fourth quarter both weaner and slaughter cattle prices increased slightly. The annual agricultural inflation rate increased from about 1% in the fourth quarter of 2017 to about 5% in the fourth quarter of 2018.

According to the NAU rising fuel prices have a major impact on the agricultural inflation rate. Fuel prices increased by 27% year-on year in the third quarter of 2018, and by 16% year-on-year in the fourth quarter.

“Farmers import most inputs from South Africa, hence increases in fuel prices, added to the costs of feed and licks, as well as medicinal inputs, also increase the agriculture inflation rate.”

Furthermore the total weighted cattle price dropped by 5.8% year-on-year and resulted from a decrease of about 12% year-on-year in weaner prices. According to the union, slaughter prices increased by about 11% year-on-year.

“Considering the entire 13 years of livestock monitoring, cattle prices increased by 157.3%, while on-farm expenses increased by 178.4%.”

Sheep prices increased by 5.7% year-on-year over the entire 13 years of monitoring, says the NAU.

“Over a complete 13 years of monitoring, the price-cost squeeze of cattle was 3.9%, and that of sheep was 0.6%. This shows that on-farm expenses continue to have a significant impact on the profits of cattle and sheep producers.”

Based on Meat Board statistics, 306 697 live cattle were exported to South Africa last year and 1 176 cattle were exported to Angola. Export abattoirs (Meatco, Brukkaros, Beefcor and North of the Veterinary Cordon Fence) slaughtered 77 471 units of cattle, while B&C class abattoirs' throughput was estimated to be around 80 000. The NAU says the small stock industry continues to produce despite the negativity surrounding the government's Small Stock Marketing Scheme. About 6.5% more sheep were marketed in 2018 compared to 2017.

A total of 205 025 sheep were marketed to export abattoirs, 164 404 to B&C class abattoirs and 456 069 were exported. Of the live sheep exported, 455 189 went to South Africa, 831 to Angola, and 49 went to other countries, such as Botswana. The union says this year's drought is expected to be worse than the 2013 drought because rangelands did not have enough time to recover.

“Farmers are expected to destock by selling their livestock, however at lower producer prices. The foot-and-mouth disease (FMD) outbreak in South Africa has made the situation worse, as it has put further pressure on producer prices. Again, with increasing feed and input costs and the current low producer prices, most, if not all, farmers will be experiencing financial losses.”


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