Mutton producers under pressure
20 August 2018 | Agriculture
The Meat Board of Namibia says that given government’s efforts to industrialise and promote value addition, the large price disparities are hampering progress in the sector.
According to the Meat Board, the long term sheep marketing trend shows a gradual reduction in the marketing of sheep. Both live exports and the number of sheep slaughtered at local abattoirs have decreased. The live exports of sheep continue to account for more than half of the total market share of sheep marketed.
“With the reduction of sheep stock in the country, marketing numbers are expected to follow a downward trend given the erratic climatic conditions associated with Namibia and the current sheep marketing arrangements that are in place,” says the Meat Board.
An 11% decrease can be observed in the sheep marketed in 2018 from January to June this year compared to the same period in 2017. A total of 433 259 sheep were marketed in 2017 compared to the 387 193 marketed in 2018.
During January and June, 241 790 sheep were exported live, accounting for 63% of the market share. The sheep slaughtered at the export abattoirs accounted for 29% at 113 103, while those that were slaughtered at the local abattoirs accounting for 8%, with 32 300 sheep.
The Meat Board added that the price difference of the Namibian A2 sheep prices compared to the Northern Cape prices is increasing month by month. A price difference of -N$9.04/kg between the Namibian A2 sheep price and the Northern Cape price was observed in June this year.
According to the Meat Board, this gap discourages throughput at the Namibian abattoirs. However, due to the 1:1 slaughter to export ratio, abattoirs are able to receive some throughput. High overhead costs, and the price for offal and sheep skin are some of the factors that are cited to affect the price that is offered to Namibian producers by the export abattoirs. Producers are discouraged to market their sheep at export abattoirs due to the increased price gap.
The Meat Board says that export abattoirs will need to become competitive in order to attract quality and a consistent supply of sheep. “Despite all the other contributing factors, price remains the main determinant of marketing both for the producers and the abattoirs.”
Furthermore, deteriorating grazing conditions in some sheep producing regions support the use of the too lean and too small drought marketing arrangement, according to Meat Board. It says there has been an overall increase in the total production of cattle between January and June 2018. But an increase in the availability of weaners in South Africa is expected to further put downward pressure on the price of producers at auctions.
An abattoir opened in Outapi which is a welcomed addition as this will provide a formal market for producers in the Northern Communal Areas (NCAs), together with the Meatco mobile abattoir.
Year-on-year, a 3 % increase is witnessed in the total production of cattle during January to June. Production increased from 224 127 in 2017 to 230 797 this year.
The increase can be attributed to the increase in the live export of weaners which increased by 8%.
From the total cattle marketed, 66% were live exports, 18% export abattoirs and 16% local abattoirs.
A total of 15 124 cattle were declared to the Meat Board by the registered local abattoirs this year. However, based on the hide purchases, it is estimated that 37 127 cattle were slaughtered at the local abattoirs.
The Meat Board says that limited throughput at export abattoirs continues to hamper the profitability and thus competitiveness of the available export abattoirs. “As more weaners become available in South Africa, the average price for weaners have decreased month-on-month.”
It says the price is also expected to continue on the downward trend. The reduction in price might result in the decrease in the number of weaners exported as the year progresses. Internationally, there is a decrease in the price of beef, most of which is as a result of an increase in production.