Rikus Grobler | Oct 18, 2017 | 0
Meatco exits sheep business due to losses
The Meatco and NAMCO boards of directors decided to discontinue with Meatco’s sheep business which entailed sheep slaughter, marketing and value addition activities. The discontinuance of Meatco’s sheep operations became effective on 31 May 2013
According to a statement issued by the company’s Senior Manager: Corporate Communication & PR, Ebben Kalondo, prior consultations with other sheep operators were made to notify them of the discontinuance of sheep slaughter at Meatco to ensure that none of them were affected negatively.
“These operators were able to comfortably accommodate our producers and even though we have moved out of the sheep slaughter space, these operators are still unable to slaughter at full capacity due to the decline in raw material,” she said.
She said the reason for this decision was because the sheep arm of Meatco’s business has been suffering enormous accumulated losses for the past 5 years and these losses have become unsustainable to the group.
Reasons are the overcapacity of sheep operators in the country which set the scene for natural attrition amongst the players and Meatco is the first to formally close its sheep operations. There remains three other operators in the market after Meatco’s exit to meet and satisfy the requirements of local sheep farmers.
There has been a year-on-year decline in available raw material and throughput to the abattoir has subsequently declined significantly. Out of all the sheep operators, Meatco was the operator that was located the furthest from source of supply which translated in additional costs.
Meatco’s value addition plant, which was operated by NAMCO and produced deboned sheep/lamb and game products, was at the mercy of a volatile exchange rate environment which made this plant’s viability unreliable.
“All the mentioned reasons which led to the unsustainable losses, informed the business decision to discontinue the sheep and game arm of the business; and to rather concentrate on the core business of cattle slaughter and marketing,” she added.
Meatco’s sheep business consisted of two separate entities, the sheep slaughter plant at the Windhoek Meatco factory and NAMCO which is a 100% owned subsidiary of Meatco which was responsible for the marketing of sheep in wholesale markets.