Livestock industry in crisis
With a surplus of meat in the South African market, prices for Namibian producers, particularly mutton, have dropped sharply.
31 January 2019 | Agriculture
Moreover, there seems to be little relief in sight, in particular for lamb and mutton producers who rely heavily on South African markets.
Production conditions are very difficult due to ongoing drought conditions in the sub-region and the foot-and mouth disease (FMD) outbreak in South Africa.
According to the chairman of the Livestock Producers' Organisation Piet Gouws, the organisation has already completed a survey on the current production conditions.
“The LPO is aware that this is a national crisis and that very little extra roughage is currently available from fellow producers. We forecast that very little help can be generated locally and discussions about this will be held this week.”
Gouws said that an urgent appointment will be requested with the agriculture minister in order to inform him about the “critical situation” and to make proposals on how to bring relief in the short-term.
The outbreak of FMD in South Africa has caused an immediate ban on all imports of cloven-hooved animals and their products, and also various fodder products, into Namibia.
Furthermore, all red meat exports from South Africa were stopped and vessels transporting meat had to turn back.
Gouws said meat producers in South Africa are under enormous pressure due to the drought and FMD outbreak and there is no indication when exports to international markets can be resumed.
“South African beef, mutton and lamb exports have seen a loss of N$1.8 billion and this meat must be absorbed into the local market. This caused a beef surplus in South African market and this competes with lamb and mutton. Thus a dramatic drop of sheep prices at abattoirs has occurred,” said Gouws.
He said the impact on the price of sheep/lamb was drastic and unexpected.
“A decrease of N$68/kg to N$50/kg represents about 27% and is even higher if one realises that lamb was selling for more than N$72/kg before Christmas. We are receiving confusing signs from the market, but like with beef, the sheep herd building phase has been discontinued in South Africa and increased slaughtering due to high prices in November/December have financially benefitted producers.”
Gouws explained that January is a standard “slim month” after the December holidays, while there are also other expenses that people need to take into account for the new academic year, school fees and tertiary education expenses.
“On top of this there is no end in sight to the drought and maize planting in South Africa is drastically reduced. Moreover, emergency marketing takes place and herd building is stopped. The price of yellow maize has already increased and can increase up to import parity which is now approximately N$3 200/ton.”
Gouws said that this has caused feed pens, which were already under financial pressure last year, to buy less and at a lower price and this affects the Namibian producer directly.
He therefore stressed the importance of livestock exports from Namibia to the European Union and Norway for the livestock industry in Namibia and live exports of weaners and lambs to South Africa.
He said the local market provision by abattoirs who slaughter for the local market is just as important for the Namibian livestock industry.
According to Meatco, the drought will result in most farmers only determining their marketing trend for 2019 towards the end of February if the much-anticipated rains do not occur earlier or around that time. On the other hand, slaughter prices are expected to remain the same or slightly increase as a result of an awaited battle for local slaughter cattle due to the border closure. This could also lead to potential shortages of beef on the shelves of local retailers. Meatco said producer prices in South Africa are dropping, particularly those of sheep, and consequently affecting Namibia's domestic sheep industry.
In addition to this, an abundance of small weaners below 200kg is expected due to early weaning and the current herd composition of mainly weaner producers.
“Live prices have already dropped from about N$36 per kilogram last year to N$26 per kilogram currently, hampering the current weaner marketing opportunities.”
As a consequence, migrating from the weaner production system to an ox production system is not a feasible option for cash-stripped farmers during a drought year because of the time it takes to rear slaughter-ready animals, said Meatco.
“In a bid to mitigate the current difficulties in the industry, Meatco has lowered its feedlot intake weight to 220kg. Meatco will also continue to pay fair prices to producers while in the process of stocking-up the Okapuka Feedlot,” said Heiner Böhme, Meatco's executive for livestock procurement.
He added that as a result of the ever-declining numbers in slaughter carcasses, the Okahandja abattoir is still closed on a temporary basis.
“However, in the event that the drought persists, Meatco will do its utmost best to accommodate producers and slaughter-available cattle. In the same vein, we expect leaner cattle with lower carcass weights coming through our facilities this year.”