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Meat producer prices drops by 4%

Tue, 20 October 2015 17:29
by Villager Reporter

Meatco Chief Executive Officer Advocate, Vekuii Rukoro says this year has been difficult for meat producing farmers but forecasts better prospects in the future.

His remarks come after overall meat producer prices decreased by 4% as opposed to the approximately 15% decrease that other markets experienced.

The decreases have been credited to fluctuations in actual sales prices, sales movement and production volumes, quality of product, seasonality of production and markets, size of cuts and distribution costs associated with getting the product to the market.

The weakness in the South African Rand/N$ started during August 2015 in terms of the Euro vs the Namibian Dollar exchange rate for the period preceding August 2015 (for January 2015 to July 2015).

From January 2014 to the end of July 2014 the average rate realised  by Meatco in terms of the Euro amounted to N$14.5714/Euro and for the corresponding period during 2015, the rate amounted to only N$13.3261/Euro which is more than 8.5% (or N$1.2453) less than 2014.

Rukoro said that was during the period in which Meatco slaughtered the majority of cattle as a result of the 2015 drought, adding that the British pound sterling (GBP) appreciated against the N$ with an average of 2.58% if compared to the 2014 year whereby it was N$17.8374/GBP for 2014 vs N$18.2978/GBP for 2015.

However, 49.16% is Meatco’s total sales value is Euro-based sales compared to only 19.59% that is GBP-based.

“Namibia, actually Southern Africa as a whole, has been experiencing a follow-up drought year that is in many areas worse than the 2013 drought. This had a negative impact on the composition and quality of cattle slaughtered during the 2015 year in terms of overall weight, condition as well as grading.

The overall quality of cattle in comparison to the prior year, deteriorated in terms of an increase in zero and one fat grades of 21.4% (from 26.01% during 2014 to 31.57% during 2015) and a decrease of 6.67kg in terms of average carcass weight (from 243.73kg/ carcass during 2014 to 237.06kg excluding feedlot A grades),” Rukoro said.

He went on to say that average sales prices, in Euro, decreased mainly due to the economic downturn in Europe as well as Scandinavia, specifically Norway, attributing it to significant decrease in the global oil price from USD 106.18/ barrel to USD 45.63/ barrel.

He added that Norway’s main income is derived from the sale of oil and gas to its neighbours, and the decrease in the oil price therefore had a significant impact in the Norwegian market.

“More than 60 billion is printed and injected into the European economy on a monthly basis in terms of the European Central Bank’s (ECB’s) Quantitative Easing (QE) program in order to keep the European economy going. This amounts to approximately N$900 billion per month and equates to more than five times the annual GDP (of approximately N$175 billion per month). The QE program began in March 2015 and is estimated to continue through to the end of October 2015,” he said.

As a result of the economic environment in Norway, Meatco experienced a decrease of approximately 10.28% in actual sales prices (in Euro) within the Norwegian market alone if compared to the previous year.