Contract slaughtering can be a win-win solution
By Thinus Pretorius
Chairperson, Livestock Producers of Namibia.
Since 2008, (after Meatco settled its then-state loan of N$32.5 million) the Livestock Producers’ Organisation (LPO) started engaging with industry role-players regarding a long-term and sustainable structure for Meatco in which all cattle producers could be involved.
This plan was submitted to the Ministry of Agriculture in 2011. The Minister of that time chose to ignore these industry proposals and added Meatco to the list of state-owned enterprises (SOE). This essentially gave the state all rights over Meatco. The Minister had the power to appoint the board and was therefore in full control of Meatco.
Right from the beginning, the LPO’s position was that Meatco is a critical pillar for optimal value addition. Over the past ten years, the LPO, therefore, facilitated the process to nominate five directors who, in the process, exposed themselves significantly in terms of their accountability for good corporate governance and fiduciary duties, and who consequently also had to vacate their positions because of this exposure.
In 2018, the LPO launched a study in collaboration with partners to determine what the Namibian beef value chain looked like and how it compares to international benchmarks. This study clearly pointed out flaws at Meatco. A comprehensive report was shared with all stakeholders and agencies, including Meatco.
During 2019 there were certain shifts in government and after the Public Enterprises Act (PEGA) came into force on 16 December 2019, Meatco was reclassified as an SOE under the Minister of Public Enterprises. In 2020, the LPO launched an urgent action to further search for a solution for Meatco in collaboration with ALL role players. It was clear that Meatco was facing bankruptcy which would have far-reaching consequences for the industry.
Various models were investigated in depth, to transform Meatco into a sustainable business. The media caught wind of these negotiations which led to the LPO being hung out to dry and blamed for attempting to destabilize Meatco with the support of organised agriculture.
Despite this, the LPO has been in continuous contact with all role players and in October 2021 was the co-signatory, together with other representatives of primary producers, of a proposal for a sustainable future for the beef value chain. This proposal was also handed over to the Minister of Public State Enterprises, the Minister of Agriculture as well as the Minister of Finance.
The core principles were that Meatco should be transformed into a producer-controlled business, operating only on sound business principles and international best practices. The role of government should be at the policy level to create a supportive environment for the entire value chain to grow.
Restoring the confidence of primary producers is a critical success factor, while a new board and management should be appointed to implement the above.
The LPO, therefore, left no stone unturned, in an effort to put Meatco on a viable trajectory. It is regrettable that the policymakers and management of Meatco harbour negative views about the efforts of organised agriculture, thereby destroying a once proud bastion, without any accountability.
At the beginning of 2022, the LPO discussed a further proposal with the Ministry of Finance to allow contract slaughtering by external Namibian meat marketers at the Meatco export abattoir. The LPO is of the opinion that this will contribute to the reduction of Meatco’s operating costs, and so may reduce the continued dependence of Meatco on taxpayers’ money.
Contract slaughtering can be a win-win solution in that Meatco earns additional revenue for services rendered, while contractors interested in using the services, retain ownership of the vacuum-packed beef and export it to the market of their choice.
Finally, it is of utmost importance to realise that Meatco will have to undergo further drastic restructuring and internal cost-cutting to avoid the government having to provide further loan guarantees to Meatco, while the fair distribution of the Norway quota between different export abattoirs will also have to be addressed.
The LPO unequivocally remains committed to continually optimise the industry by investing energy and resources to identify and support potential alternatives that could be of value to the industry.