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January 26, 2009

Namibian sheep farmers struggle with viability

by Catherine Sasman

Small-scale mutton farmers in the south of Namibia– Karas and Hardap regions – say they find themselves between a rock and a hard place. They say while they are in full support of the Government’s quest to promote value addition of meat products in Namibia – primarily through the country’s four export abattoirs – farmers claim they get little price joy from local abattoirs.

Under the Small Stock Marketing Scheme, the Government imposed a 1:1 ratio to be exported and slaughtered here in the country. According to the Meat Board, the Government then gave the industry four years to slaughter all sheep locally, with the intention to gradually slaughter sheep locally to enable capacity and infrastructural development here. This ratio was increased, first to 2:1, 3:1 and in September 2006, the 6:1 ratio was introduced, meaning that one out of six sheep produced here is allowed across the border to particularly the South African market. This 6:1 ratio, the Meat Board said, was periodically terminated for short periods to make provision for drought measures.

But the restriction on exports is in place because of the Government’s policy to add value locally to live and slaughtered animals, which the Meat Board said the first step of which is the slaughtering of livestock and cutting of carcasses that will be followed by further processing. “This will ensure that jobs are created within Namibia,” said Willie Schutz of the Meat Board. The board, said Schutz, is fully in support of value addition, and since it consists of members of the producers (communal and commercial), abattoirs, processors and Government, has had various consultations between the various parties and advised the proposal to Government.

But for now farmers, who met in Keetmanshoop last week, say the ratio is killing them, impoverishing them. They have drawn up a petition, which farmer John Foster says is currently being signed by small farmers in all districts of the southern regions. He said 1 500 petition papers have been printed, and if all of these are to be signed by disgruntled farmers, it will represent a large portion of the 7 000 or so meat producers.

The petition expresses the farmers’ – albeit mostly unorganised, and hence farmers not belonging to any particular association or union, according to sources – discontent with the restriction on exports, and make a clear demand to have the Government reconsider the export ratio. Production costs, said Foster, one of the organisers of an emotive meeting held last week in Keetmanshoop that called up small stock farmers to action, has risen by 92 percent between November 2007 and November 2008. “Petrol prices have come down, but our production costs have not,” he bemoaned. So, for example, he said, a 50 kilogramme bag of animal feed currently cost N$164 that can feed up to 25 animals per day.

The result? Higher costs per output, which few farmers can afford, and hence layoffs of farm hands. “The south is impoverished; unemployment is the order of the day, and I blame foreign partners to local abattoirs for this, who have set low prices for our products,” Foster charged. “The prices will become more balanced if the border [with South Africa] can be opened,” he said, arguing that “cheap meat” – although of the highest quality “in the world” due to the organic farming here, is currently being exported to South Africa, and hence possibly frustrating South African producers who have to compete with both quality and pricing.

According to Foster, as many as 2 000 families of farm workers are forced off farms as producers buckle under the high production costs.But the organised producers and meat processors said it is unfortunate that the “unorganized” farmers now come with a mass action – such as the petition and threats to boycott certain local abattoirs for the low prices – since producers and processors are “close” in reaching an agreement that has been a long time coming, and that the Government is anxiously awaiting to end the dispute between the two groups. By late last year, three Permanent Secretaries of the Ministries of Trade and Industry, Agriculture and Finance were to pronounce themselves on the marketing of live sheep from Namibia.

But, said PS of the Ministry of Agriculture, Andrew Ndishishi, this was referred to the industry players to come up with a common position. “The ball is in their court,” Ndishishi commented.

And because the proposal is such a complex document, there have been submissions and counter submissions from all sectors in the industry, and hence the long delay before an agreement is on the table. PS of the Ministry of Trade and Industry, Dr Malan Lindique, said he is hopeful that a finalised agreement will be reached by the end of the rainy season – around March and April – after which it is the peak export period.

Although the chairperson of SNAFU (Southern Namibian Farmers’ Union for communal farmers), Johannes Jensen, said while his organisation would not support the “opening up” of the borders for export with South Africa, it would advocate that the restriction on particularly fat-tailed sheep be lifted. Local abattoirs, he said, are not interested in fat tailed sheep due to the low market value thereof, but according to him, South African abattoirs are willing to pay fair prices.

“It is unfair that non-preferred sheep [the fat-tailed sheep] are not paid a nice price [here],” he commented. Communal farmers are said to be mainly producing the hardy fat-tailed sheep, and hence these farmers are particularly hit by uncompetitive prices inside the country.

The Brukarros Meat Processor (BMP) has expressed surprise at the southern farmers’ position. In a letter directed to New Era, the abattoir wrote that it was surprised to hear that the southern farmers are contemplating a boycott on local export abattoirs [the farmers indicated that they would open negotiations with Meatco for more favourable prices of their products], and to “blackmail” the Government into amending its policy and visions to establish an industrialised Namibia”.

The letter signed by the BMP board of directors, Kabols le Riche, denied farmers’ claims of large price differences. Farmers claimed that on average they receive between N$25 to N$28 per kg for their products here while South African abattoirs pay on average N$35 per kg. Citing a comparative price list between BMP and the abattoir in Upington, Le Riche pointed out that the price difference is not more than between N$1.50 and N$2.

“It is true that all Namibian export abattoirs and the small stock industry in 2003 – even before BMP’s existence – agreed upon a price difference of N$1.50/kg between local prices and the average price reported to the RMAA in South Africa. The difference of N$1.50 was calculated based on logical cost differences that local export abattoirs have compared to the abattoirs in South Africa,” wrote le Riche. But the LAW Abattoir at Grobbershoop in South Africa indicated that it pays N$36 per kg for super grade, and N$35 per kg for A2 and A3 graded lamb. Le Riche continued by saying that it is also true that recent recalculations of these costs revealed a justified price difference of at least N$2.40 per kg due to “creeping inflation and increased costs such as fuel and other related commodities, but BMP still succeeded to outperform the deviation”.

He said the allegations published recently were “far-fetched and a deliberate effort by a certain group of individuals, with unknown motives, to discredit BMP and the industry”. Le Riche added that BMP is “committed to do all possible to contribute to the success of the local small stock industry and together with that, ensure fair compensation to producers. But Foster maintains that farmers are being “cheated”, although the prices between South African and Namibian abattoirs this week proved to be more on par with the niche market in South Africa paying N$33 opposed to N$32 in Namibia – this week. Before Christmas, Namibian small producers said Foster at best could muster N$29.50 per kg, roughly N$6 less than from South African abattoirs. “Why are the prices suddenly normalised?” questions Foster. “Before prices were also right-sized after we have made threats, but as soon as the dust has settled over fights, the price gap widened again.” While the battle rages on between producers and processors – and the agreement between the parties is not finalised – said the farmers, things won’t settle and they, and their workers, remain at the losing end.

New Era

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