By:Nghiinomenwa-vali Erastus
Meatco chief executive officer Mwilima Mushokabanji has indicated that despite external factors, internally they have met all the board key performance indicators to get the company profitable.
Mushokabanji said what is happening to the company cannot be attributed to Meatco’s management nor the board, but to external factors that affected raw material supply, weaner export, FMD, and unsustainable historical debts.
He also said the leadership has a positive outlook on the company’s performance given the local head recovery, which guarantees throughput and constant slaughtering of around 60000 to 65000 cattle annually.
The CEO was responding to the agriculture minister Calle Schlettwein who this week labelled the meat processing company to be “under ICU”.
Internally, he said, they have done what they have been tasked to by the board, from reducing their workforce and reducing their historical debts which were inherited from the previous board and management.
Regarding throughput (raw material), Mushokabanji explained that the livestock sector is just recovering from the worst drought of 2019/20 which reduced the number of cattle available for slaughter in the country.
He said that during the drought, most farmers converted their cattle into cash to avoid losses, and head recovery takes time for a country that does not use any hormonal growth.
“As a result of the drought, the farmers needed 2 to 4 years to build their heads depending on the quality of grading. After buying up the drought-forced sale animals (around 116 000) in 2019, from 2020 to 2021 the company started to experience throughput issues, which reduced the supply of raw material to Meatco leading to Meatco slaughtering on average 35 000 cattle,” the CEO explained.
The country is a net exporter of weaners (200 000 annually), he said, which reduces the future supply of ready-to-slaughter animals.
Further, many of the lucrative markets that consume the country’s beef have been hit by Covid-19, reducing their imports, while the country’s largest meat consumers likelocal hotels and restaurants were been hit by Covid-19 restrictions.
COMMUNAL FARMERS AND DIFFERENT MARGINS
Mushokabanji explained that in 2020/21, the government issued a directive that Meatco needs to be inclusive and empower all local commercial and communal producersproducers, five years after Meatco pulled out of the communal areas.
This, he said, resulted in Meatco teaming up with Zamco to operate the Katima Mulilo export abattoir.
He argued that most of the northern abattoirs are governmen-owned, and if they are not buying animals or operating, it is not Meatco’s fault but that of government and the entity which was appointed to operate them.
Meatco was given the directive to operate the Rundu abattoir, but will be handed over to Meatco at the end of February or March 2023.
The CEO also highlighted that they agreed to operate the Northern Communal Areas on a commercial basis and have asked government to give them six months to develop a broader market, targeting the Ghana and Angola markets, for example.
The rest of the existing markets, such as Europe and America, do not accept beef from FMD-prone areasand lung sickness associated with the northern areas, even if they are produced under commodity-based methods.
The CEO indicated that they had to put more resources to develop a market for the northern communal area farmers in contradiction to what has been reported recently that the entity has done minimal to assist communal farmers.
“We have developed markets, something that has never been done in the past 30 years,” he ountered.
In terms of price disparity the entity is paying to the farmers in the northern and south of the redline, Mushokabanji said is based on margins paid by the export markets.
He explained that the southern farmers have access to lucrative or high-margin paying markets compared to the northern farmers.
Thus, producers are paid in accordance with the income their beef generates from their respective export markets.
However, he has indicated that they are also engaging the Middle Eastern countries as potential markets for northern-produced beef, which could command better prices for northern producers.
THE FINANCE AND GOVERNMENT AWARENESS
Mushokabanji has explained that in terms of their finance, Schlettwein has had access to Meatco’s financials, and external challenges and his ministry has been the appointing authority in terms of the board.
Additionally that every stakeholder is represented on the board and he reports to the board weekly on the progress being made, which is up to them to communicate effectively to the appointing authorities/stakeholders.
He also added that Meatco has presented its strategic plan to over 10 ministries, including the office of the prime minister, and various executive directors.
According to his update, the current board assessed the company financed in 2020 and one of their outcomes was that Meatco was locked up in debts that were taken from back 2013/14.
The assessment revealed that by that time, Meatco owed FNB N$520 million, and owed Bank Windhoek N$94 million in historic debts, with Meatco’s assets such as Okapuka Feedlots attached to the loan.
The board then decided that is not sustainable for the company to be in the hands of external financiers and the management was given the task to pay off the debts, which they managed to pay off Bank Windhoek’s debts in a space of 2 years despite the draught.
.Mushokabanji indicatedMeatco also acquired a N$250 loan from the Development Bank of Namibia and use it partly (N$120) to pay the FNB’s loan and the company paid the remaining amount.
Currently, Mushokobanji said Meatco’s debt is around N$600, however, the N$200 million is not in the books of Meatco but it was taken up by the government in the past.
According to him, Meatco’s current debt plus interest is just N$450 million, reduced from the accumulated historical debts that put Meatco’s assets in the hands of external financiers.
Email: erastus@thevillager.com.na
