User:Tshepi Hill/My Sandbox

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=17th January 2013=

Benchmark in Namibia
The task force benchmarked in Namibia on three main areas The reason for the visit to Namibia was to benchmark and to exchange experiences with Namibia with the hope that whatever Namibian did in the meat industry, would probably assist BMC to move forward.
 * The Meat Board of Namibia
 * The Ministry of Agriculture, Water and Forestry
 * Two abattoirs, Witvlei private export abattoir and MeatCo and
 * MeatCo Feedlot

1.	Visit to MeatCo MeatCo is the biggest abattoir run by a corporation in Namibia with an annual revenue of N$1.4 billion. MeatCo aims to improve the cattle industry as it is a farmer business.

MeatCo as a Corporation for farmers

MeatCo was formed as the Meat Corporation of Namibia - incorporated in terms of the Meat Corporation Act, 2001 (Act 1 of 2001). MeatCo holds app 35% of the Namibian beef market share not dominant like what BMC does. It has no Shareholders or Owner at present. This is similar to Statutory Trust holding a responsibility to sharing public Accounts. The corporation is accountable to Members with a variety of powers held by the Board. The Namibian government is currently working on a structure to control 30% of shares in MeatCo so as to protect the communal farmers which they have been working on for the last 5 years. Government has currently no stake on MeatCo.

The supply of cattle to MeatCo is from both commercial and communal farmers across the country. MeatCo pays the same export prices in the Northern as the southern side of the FMD cordon fence to farmers as a result they make losses when purchasing cattle this way. Instead of making profits and declaring bonuses they are “maximising on paying producers maximum prices on the day”. They have dealt away with all the subsidiaries.

Governance MeatCo has a small board comprising 6 board of directors on a three year term; 4 nominated by farmers and 2 members are experts nominated by producers all appointed by the minister. Within this board there is a representation of 1 each of commercial and communal farmer within the board of six and an additional 3 are co-opted by the Board. MeatCo board members as per Act represent total spectrum of farmers. MeatCo has skilled board members and has 3 board committees to assist on specific board operations of audit, human resources and remuneration.

Membership to MeatCo is based on that any farmer who has sold at least one animal or more in last 2 years at MeatCo is eligible. Members can recommend the removal of board member to the Minister and determine the requirements of registration of member which is very similar to ordinary shareholders. In a way members have duties to control the board. Management advertise Annual General Meeting. The Minister’s duty is to appoint members from nominations received except representation from the Ministry of Agriculture, Water and Forestry of Namibia. He can request for information from the board and make recommendation but the board has no obligations to implement these recommendations. There is constant communication between MeatCo and producers on livestock development and they communicate the changes through different media and partnerships with media as well as AGMs

Slaughter figures to MeatCo and other Abattoirs The industry is at a criss cross lately, the number of cattle to slaughter this year went down due to many reasons due mainly bush encroachment and the high cost of farmers, production has significantly dropped. Live cattle export has been increasing over the years up to 2011 this impacted on slaughter figures in the country. Live export is to Angola and RSA; RSA export is mainly weaners to feedlotters in RSA as most of the farmers do not have the capital and expertise to finish the weaners. The market is very competitive as they also have local butcheries and Witvlei Meat slaughtering a significant amount (and paying producers more). RSA export amount to 49% of cattle that would be going into abattoirs. They also face competition from informal abattoirs and butcheries.

Cattle sourcing MeatCo obtains cattle from Veld lotting, Ekwatho, Feedlots and commercial (SVCF) to feed into the abattoir. The cattle slaughters figures have been going up and down with years from 1993 and have been affected mainly by FMD outbreaks e.g. 2009/10. Their strategy is to build their own production so as to level the supply to the abattoir. As a result they have their own feedlot.

Marketing
MeatCo places marketing at the top of its agenda. They managed to increase revenue despite the low supply of cattle to the abattoir. This was attributed to the strategy in place of establishing a strong Brand of Nature’s Reserve. They have concentrated on adding value to MeatCo products, specification to customers, less of frozen products, timing of sales and focusing on end users i.e. directly with customers. The increase in revenue was also due to having an Integrated Planning and Sales strategy System and developing plant capabilities (Value Added & Flexibility) as well as improving and maintaining strict quality standards in their quality assurance side. By Using GPS to market their product, MeatCo has changed from being production to a market driven corporation.

MeatCo’s future strategy is to maximise on producer returns and focus on developing the cattle industry via systems that would increase cattle numbers to the abattoir.

Livestock Procurement MeatCo procures cattle from both communal and commercial farmers. This can be directly through
 * Producers signing Contracts
 * Contract premium is paid upon performance
 * Quota for communal and new farmers
 * On-hoof in communal / resettlement / commercial areas (payment based on ‘live weight’ or ‘dead live weight’)
 * Advance payment to communal farmers N$1 500
 * Assist with logistics of communal and merging producers
 * Producers can sell to MeatCo indirectly through use of livestock agents and auctioneers or auctions.

The use of dead live weight versus live weight takes care of differences that may arise when paying farmers/producers per weight of cattle sold to MeatCo. The cattle here are weighed just before they are slaughtered after stunning.

Some Interventions to improve cattle supply Feedlotting- this is a specialised and very expensive exercise. MeatCo has its own feedlot and it is manly to supply specific customers. They have a label to indicate that the meat is grain fed and all feedlot animals are branded as grain fed. MeatCo procures feed and delivers the feed to the feedlot. The animals have to grow in excess of 600-700g per day. •	MeatCo invested N$293.6 million in the Communal Areas since 1992 •	MeatCo pays the same prices for similar animals in the Communal Areas and south of the veterinary cordon fence. This is verified by KPMG. •	Different quality animals fetch different prices irrespective of where they are sourced. The quality is determined by the Meat Board representative at MeatCo’s abattoirs according to age and weight. •	MeatCo management determines and set prices to pay the producers. The producers have a producer forum. MeatCo exports to Iran, Russia and EU and they pay attention to specialised niche markets requirement for example the Norwegian market. In Africa they export to Angola, Zimbabwe, DRC; segmenting to selling cheap product with advanced payments before they ship the product. China market- they are waiting for the final audit to implement the economic partnership agreement between Namibia and China

Challenges faced by MeatCo •	Declining market share of cattle coming to MeatCo; MeatCo takes 25% for export and export of live cattle from farmers to RSA takes 49% •	Underutilization of slaughter capacity •	Increase of informal abattoirs and butcheries •	Impact of the 90/40 days residency on compliance •	The changes in exchange rate and the strength of the ZAR

MeatCo is working closely with farmers in communal areas to ensure traceability is complied with. They however alluded to the fact that, sharing EU prices with farmers is not a good practice to adopt because only the hind quarter fetches the price in EU while the rest of the carcass is sold in elsewhere and the premium price is not realised.

2.	Visit to the Ministry of Agriculture, Water and Forestry (MoAWF) The team was received by the director of Planning in the MoAWF of Namibia. The Department of Veterinary Services gave a presentation on LITS and how compliance issues are addressed in Namibia.

The following is a summary of the presentation •	Namibia uses the double ear tag to address compliance issues in the market •	DVS is the leading role in ensuring that there is compliance •	Farmers who want to sell their livestock have to comply or their farmers and/or livestock brand is closed to prevent them from selling •	They use a system linked to stock brand so they can identify the animal with the owner •	The ratio of communal to commercial farmers in the whole of Namibia is 40/60 •	Most of the commercial farms are fenced and comply to EU market requirements •	MeatCo and other private abattoirs work with farmers to comply •	The ear tags are centrally sold by the Meat Board of Namibia •	In order to comply DVS has devised a system to fence out communal areas (districts) to allocate them as registered holdings (Botswana is still working on the best modality to allocate registered holdings)

Administration of ear tags Farmers buy ear tags from the Meat Board. Each ear tag is issued with a registration card containing farmer details and tag number with a barcode. The role of the farmer is to enter details of the animal tagged on the card and return it to the nearest DVS office. The information returned will be captured into the database and the animal registration is complete.

Role of MoAWF The Ministry has a budget of up to N$2 million to support abattoirs. The government through the Ministry has listed MeatCo as a State Owned Enterprise (SOE). This means that the government appoints the Board of directors. In return, MeatCo must have a business plan and 5 year strategic plan as well as performance agreement and governance agreement. This is mainly to try and have a stake in the corporation so that all farmers are represented in the corporation.

=18 January 2013=


 * 3.Visit to the WitVlei Export Abattoir

Witvlei is a private export abattoir established in 2006 in Witvlei town. It was given export approval in 2007 to export to EU. •	Employs about 154 permanent employees •	Has 7 Board of Directors •	Buys only EU compliant cattle from both commercial and communal farmers •	They use top bottom approach where they start with the market and identify customers before they produce •	They pay producers more than MeatCo •	Produce for export market only and according to what the customer wants i.e. lean meat WitVlei Meat has a special partnership agreement with Notura Corporation (they receive stock on their behalf to sell in the Norwegian market). Some of the recommendations Witvlei gave to BMC are as follows:- •	Do not use the middle man •	Do away with subsidiaries and cold stores •	Be ahead with technology, new technology bring costs down •	Cut down on the cash flow cycle, and the time spent between slaughter and the market; within 21days Witvlei product is in the shelves •	Change logistical approach The government of Botswana has to make provision to sustain BMC. Delayed payments from debtors will result in delayed payment to producers. Witvlei has perfected the model; they get their money before everyone including MeatCo. Botswana has to fast track the bilateral agreement between Botswana and Norway. (The agreement is such that it is between Norway and SACU. Botswana has a share of the quota and Namibia can only get the part of the share if Botswana is unable to do so like the case if 2012 when Botswana gave Namibia to utilise its share of the quota).

Witvlei operates as a private abattoir and MeatCo is its competitor. They are however, willing to assist BMC in any form of agreement to raise the market price. BMC is currently a price setter as it produces high volumes, Witvlei is a price follower. Both BMC and Witvlei can benefit from improvement at BMC.

Although Witvlei produces for export market, they have a local outlet in town where some of the products (unclassified for export) can be sold in the domestic market. Due to competition, they have been able to increase producer prices up to 40%. They supply their product according to the customer specification.

Presentation on Quality management at Witvlei They pay DVS for inspection and provide housing for DVS official based at the abattoir. Their meat is classified by the Meat Board and they pay this fee in the form of a levy. Members of the quality management comprise employees from: •	Quality Management •	Operations •	Finance Witvlei Meat operate within 5 statutory instruments (national legislation) governing the Meat Industry in Namibia. For exports to RSA they adhere to 3 legislations. For the export market to EU, Witvlei has to comply to 16 regulations in order to meet the market requirement. They have in place some 50 regulations that are to be followed in the abattoir to produce safe meat to its customers by obligation. They do all these with skilled quality management team under the supervision of DVS.

Transport to markets Witvlei has articulated trucks which loads the refrigerated sealed containers from the abattoirs directly to the markets. In this way they avoid the middleman to ship their product to Europe. They also ensure that the DVS Namibia certifies and seals the consignment ready for the market and in RSA they only have to a transit permit. This way has made it possible for them to cut on logistical costs.

Visit to the Meat Board of Namibia This is a Parastatals established under the Meat Industry Act (1981). They report to the Minister. They are a regulatory body for all livestock products. The meat board is financed by Levies paid by slaughter facilities. Have a duty to classify all meat produced in Namibia and regulate the performance of meat industry to produce Farm Assured Namibian Meat (FAN). The FAN is expected to meet minimum standards in order to qualify in which the Meat Board can place their stamp on the carcase to certify such. Namibian Meat Board has membership from both commercial and communal areas. Their other roles include implementation of ear tags by selling of ear tags to farmers while DVS runs the system.

4.	Summary of the visit to the two abattoirs, feedlot and the Ministry Agriculture in Namibia

•	Namibia DVS is involved in compliance issues but the abattoirs take a lead in implementing the rules and regulations within the abattoir. They ensure that food safety is adhered and as a result DVS is only present to check them. For instance, in Witvlei Meat, they have a time siren that rings after every 30 minutes to change knives in the cutting room; they have re set it to go off at 20 minutes interval just is ahead). The presence of DVS was very minimal at abattoirs particularly in the deboning rooms where the task force able to see the difference to that of BMC. •	The fact that both establishments of abattoirs were open to the private sector encouraged competition. BMC is a monopoly and controls meat export. •	Producers are encouraged to comply with EU markets requirements by paying better prices at abattoirs. •	The zoning of the country in Northern and Southern by a cordon fence to separate FMD prone areas is similar to Botswana. They also have 2 abattoirs in the North to take care of the sale of livestock (similar to Maun).

•	Marketing is done aggressively using branded products and labelling as well as producing for the customer according to customer requirement. There is also serious market segmentation in both abattoirs. •	The presence of the Namibian Agricultural Boards; the Namibian Meat Board is one example standing in as a regulator of the industry and setting minimum standards for all meat in Namibia.

•	BMC and DVS can benchmark some of these to improve the situation in the meat industry in Botswana. •	Board of Directors composition is small and highly skilled (BMC has 11 board members) •	Minister appoints board after nomination is made by producer members (The Minister of Agriculture in Botswana appoints the board and the Act gives authority to do so can disregard nominated members) •	Marketing is key in all abattoirs and they are market driven

/Second Visit/ London and CapeTown