The Ministry of Agriculture has expressed concern over the Meat Corporation of Namibia’s (Meatco) ability to support its recovery efforts.
The Minister of Agriculture, Water and Land Reform, Carl Schlettwein, believes that the company’s resources and structure are insufficient to meet the challenges posed by current market conditions.
“Meatco is currently technically insolvent with its debts having surpassed its assets. A recovery out of own resources and with current structures in place is highly unlikely,” said Schlettwein at a Ministerial Strategic and Annual Planning Workshop at Swakopmund on Monday.
He said despite having a de facto monopoly, Meatco did not perform adequately in comparison to its competitors.
“This situation has changed since the market forces made the opening of privately owned abattoirs and beef marketing entities possible. Beefcor, a privately owned entity, has already surpassed Meatco in cattle slaughtered. Savanna Meat, a further entity has been registered, which will increase competition. The result is a sharp decline in market share, which in turn brought about serious loss-making,” he said.
The situation has sparked a discussion about Meatco’s future and the broader implications for the industry.
This comes as Meatco is facing significant financial challenges, according to a recent organisational review conducted by consultancy firm Ombu Capital.
The review was commissioned by the Development Bank of Namibia (DBN), which provided a N$200-million loan to the company.
The review found that the combined impacts of low slaughter numbers, rising producer prices, and high fixed overhead costs have put significant pressure on Meatco’s cash reserves and ability to operate on a month-to-month basis.
The report noted that Meatco is currently slaughtering only 2,250 animals per month, far from the 5,000-6,000 required for the company to break even.
To reach this level, the company will need an additional N$192 million in funding, excluding DBN capital and interest repayments.
Meatco’s current low throughput is expected to result in a monthly operating loss of N$22 million.
