Mutton still under pressure

The domestic supply of sheep to export abattoirs in Namibia remains under pressure with a decrease of 23.59% in the number of sheep slaughtered at local export abattoirs.

From January to August this year the number of sheep slaughtered at export abattoirs has declined from 254 770 last year to 194 646 in 2017.

According to the Meat Board of Namibia, the main reasons for the significant reduction in local slaughter numbers are a decrease in sheep numbers due to unfavourable climatic conditions and the lower local producer slaughter prices compared to the slaughter prices in South Africa.

The Meat Board says the live export of sheep continues to account for more than half of the total market share of sheep marketed. This represents a 57% share compared to the sheep slaughtered locally with a 43% share.

Overall, all three export abattoirs slaughtered below 50% of their total capacity, achieving only 33.89% of their total capacity.

“Although alarming, the percentage utilisation is a result of the decline in the number of sheep slaughtered at these abattoirs, driven by the overall decline in sheep production in Namibia over the past years.”

Aranos abattoir slaughtered 43%, Farmers' Meat Market 27% and Brukarros at Keetmanshoop, 36% of their total slaughter capacity respectively. “This is a very worrying trend as the profitability and long-term sustainability of these facilities comes into question,” said the organisation.

Farmers' Meat Market has already earlier this year announced that it will shut its doors.

Moreover, the Meat Board says a shortage in the supply of sheep will be observed due to the retention of sheep by South African producers because of the new pasture growing season. This will have a positive impact on Namibian sheep exports as the demand and therefore the associated price, will increase.

“A narrowing South African-Namibia price differential will act as a pull factor for the local producers over the short term to slaughter at the local export abattoirs instead of exporting live. The high long-term South African-Namibia price differentials are one of the main reasons why local producers are discouraged from slaughtering at local export abattoirs. Local producers will continue to prefer the export market if local slaughter prices are below the South African parity price.”

It says the high South African-Namibia price differentials which threaten the survival of local export abattoirs and the unavailability of grazing, still places the local sheep industry in a very bad spot. Producers will be compelled to market their animals where the price is most favourable and where they are able to experience increased overall welfare.

“The current financial situation, coupled with the decreasing number of sheep in the country should urge abattoir owners to come up with innovative models to improve their competitiveness and to ensure an increase in the number of sheep slaughtered at these respective abattoirs. This can also discourage exports.”

For the period January to August this year, there has been a 4.69% increase in the total production of sheep from to 555 194 between 2016 and 2017.

On the other hand, the higher probability of South African feedlots has increased the exports of Namibian weaners especially since local slaughter prices underperformed significantly compared to local weaner prices.

The Meat Board says the weaner- and slaughter prices are expected to remain firm in both Namibia and South Africa over the medium term due to the shortage of the supply of cattle in South Africa and the high demand from the South African feedlots, driven by lower feeding costs.

“After many years of a declining real weaner- and slaughter price, both have increased from 2016 to 2017, with real weaner prices being the star performer for the period under review. Real prices are however still expected to decline over the long term, emphasising the fact that farmers must become more efficient,” Meat Board says.

There was a 36.65% increase in the total production of cattle measured between January and August comparing year-on-year. This is an increase of 216 999 to 296 524.



Cattle are up

The increase is driven by the sharp increase in the live export of weaners to South Africa, increasing by 73% year-on-year.

From the total cattle marketed in 2017, 74% were exported live, 20% marketed at export abattoirs and 6% marketed at B and C class abattoirs.

Out of the 78 150 cattle slaughtered during the reported months, 415 were cattle slaughtered at the Meatco mobile abattoirs in the northern communal areas (NCAs). The mobile abattoir is currently the only market available for these producers. The Oshakati and Katima abattoirs have been commissioned and therefore, despite not being operational yet, it presents a better opportunity for NCA producers in future.

“The question still remains whether we have sufficient take-off in the NCA to render these two facilities economically viable.”

An increase in the live exports of cattle to South Africa is linked to the increase in the price of weaners being offered by the South African feedlots.

Last year 126 283 weaners were exported compared to the current 218 789 that were exported this year. South African producers are retaining their weaners to take advantage of the improved availability of relatively cheap fodder.

ELLANIE SMIT