Meatco’s revenue for the 2016 financial year dropped by 6,2 percent to N$1,69 billion, weighed down mainly by the reduced number of cattle slaughtered south of the Veterinary Cordon Fence, which declined by 21,7 percent compared to the previous year due to the effects of drought.
Water challenges in the central areas also contributed to some operational challenges during the period under review.
Despite these challenges, the meat processing and marketing company, still posted a net profit of N$19,3 million compared to N$13, 1 million in prior year at the back of a 33 percent savings in Meatco’s total water consumption following the closure of the Okahandja factory.
The cost of water is a substantial component in Meatco’s overall operating costs.
“The unfavourable climatic conditions and resultant water crisis in Namibia contributed to a challenging year for the group and corporation,” the company said in its Annual Report for the year ended 31 May.
Around 44 percent of Meatco’s total volume was exported to international markets, which accounted for 77,08 percent of revenue.
Meatco paid 53,12 percent of its beef revenue to producers, which amounted to N$900 million during the period under review.
Meatco said as farmers began to restock the national herd, the impact of lower cattle numbers meant that Meatco was compelled to offer record prices in order to motivate farmers to deliver stock to the corporation.
Looking ahead, Meatco said it expects low slaughter volumes in the first two quarters of the new financial year.
“Meatco will have to rely on the backwards integration initiative to maintain slaughter operations,” the report said.
Like other industries operating in central Namibia, Meatco was affected by the water crisis, which affected Windhoek for two years, which forced companies that use a lot of water to scale down on some of their operations.
Meatco closed its Okahandja abattoir as a result of low animal supply and a shortage of water and decided to run the Windhoek factory at full capacity.
Meatco was also forced to close its Okapuka feedlot for eight weeks after traces of zeranol was found in its products.
Hormones like zeranol are naturally occurring substances. They can be technologically modified to be administered via implants or injections or oral intake to promote animal growth. Science has shown that prolonged continuous intake by humans can lead to various diseases such as cancer.
“It is even more commendable that Meatco could meet its full, 1,600 tonne quota to Norway, proving to Norwegian and Namibian authorities that Meatco is capable of fully utilising the quota, extracting maximum value from its markets and passing on the benefits to its producers,” Meatco said.
Meatco is confident that it is adequately funded and has the necessary reserves to meet its commitments.
“Meatco’s financial position can, therefore, be considered healthy at present, with the only concerns being the limited number of cattle available due to three consecutive droughts,” the company said.