The Namibian broiler industry has great potential to create more jobs, provide food security and industrialisation, but it faces many challenges, results of a study released this week show.
Currently, the broiler industry benefits from import restrictions – a measure aimed at establishing a local industry – however, the South African Poultry Association has taken government to court where the matter is currently bogged down.
The study also shows that membership of the Southern African Customs Union makes dealing with anti-competitive behaviour and dumping very difficult.
“Uncertainty around the current legislation hampers the development of the industry, as new entrants fear their investment may be jeopardised,” said Cirrus Capital, which was tasked to conduct an economic impact assessment report commissioned by the local poultry association.
The local broiler industry contributed 0.71 percent (N$888 million) to the gross domestic product in the 2017 financial year, it said.
According to Cirrus, “This could grow to two percent under the right conditions , including clear, concise and supportive legislation and increased consumption of poultry products.”
Namibia lags far behind South Africa in annual per capita consumption of chicken, with roughly 13kg consumed locally compared to South Africa’s 38kg.
Local consumption stands at 2 500 tonnes per month, of which Namibia produces 1 900 (67 percent). Restrictions limit imports to a maximum of 1 500 tonnes per month, but the current protection sees importers trying to obtain the most quota instead of joining the local industry and moving from imports to local poultry purchases.
Cirrus Capital said a survey conducted in the retail market shows that the shelf price of imported poultry products is only slightly lower than that of local products, while the benefit of imported poultry does not pass through to the consumer.
“The domestic market has also ensured other types of poultry products, including fresh chicken, chicken livers, cleaned feet, etc., could enter the Namibian market. Many of these products are very cheap sources of protein for Namibian households.”
The report said local SMEs have started adding capacity too and Namibia could be self-sufficient by the end of 2019.
The report said production input costs are higher in Namibia than South Africa, and Namib Poultry Industries (NPI), the leading poultry company in the country has streamlined its processes to be exceptionally efficient.
“The risk of water shortages in the long-term has been reduced by the investment of N$11 million in a reverse osmosis filtration system.”
Compared to South Africa, water and electricity costs at the abattoir are two and three times higher in Namibia, respectively. Namibia has the highest electricity costs in the sub-region.
NPI currently employs 665 people, of which 513 workers are unskilled, contributing to the welfare of roughly 2 600 people. Through Namib Mills and Feedmaster, a further 96 indirect jobs have been created by NPI in the value chain.
Cirrus found that the multiplier effect stood at 4.42 times meaning that for every N$1 output the industry generates, the overall impact on the economy is N$4.42.
It said for every N$100 spent on local chicken, N$56.20 stays in the local economy rather than flowing to South Africa to pay for chicken imports.
“Overall, there can be little argument against the further development of the local broiler industry, but without a supportive legislative framework, it remains risky for new players to enter the market,” the report said.
Cirrus called on the government to finalise the Namibia Board of Trade Bill.
“This bill, which will establish the Namibia Board of Trade as the national body required under the 2002 SACU Agreement, is delayed with no real interim relief in the near future. The bill will deal with issues related to unfair trade practices, tariff investigations, and tariff setting. Without it, SACU membership is prohibitive in terms of protection for the industry.”