Meatco’s Initiative to Help Producers

Meatco will implement various new strategies aimed at securing more cattle for slaughter at its abattoirs starting this month.

One such strategy is the Meatco-Owned Cattle (MOC) initiative that focuses on securing cattle through a binding with producers. Namibian producers yield a large number of weaners and Meatco plans on intercepting these animals before they are exported. In an effort to add value, the Corporation would like to commit producers to the company earlier in the production chain. MOC forms part of such a backwards integration which extends the Meatco value chain. MOC Manager, Abrie van Wyk, says there are two MOC products at the moment. The first is known as the Profit Share MOC product. He says this product is currently available for intensive rearing systems in semi-intensive and extensive field conditions. “It’s more or less includes the whole spectrum of how you can rear cattle for slaughter,” he says. “Basically, what happens in this type of contract is the client hands in an application for the number of animals approved on a contract, then buys the animals at his own risk and rears them,” he explains: At the time of purchase, Meatco pays the physical capital costs for purchasing the animals and makes the capital available to the client at a prime bank rate. At the signing of this contract, producers can choose from one of two ways on how they are going to market their animals once the day of slaughter comes. “You can either choose the option in the contract to deliver the animals to the feedlot, or you can choose the option in the contract to produce slaughter animals. The option you choose will be indicated in the contract upon signing.”

“On the day you market those animals to Meatco, whether it’s to the feedlot or at the slaughterhouse, producers are going to get a selling price. Producers then take the risk of that day’s sales price,” says Abrie.

When the cattle are sold, the initial capital extended by Meatco is subtracted with interest. He adds: “When the client makes a profit, then the surplus is paid out to him. In short, this is really what this contract entails. The producer also carries the risk of lossdeath of animals, so he carries the exact same risk as the producer who goes to the bank to borrow money.”

The second MOC product is known as Contract Feeding. At the moment this contract is only available for the intensive rearing system of cattle in feedlots. With this contract, Meatco takes the purchase price risk and the producer only takes the rearing, or the value-addition, risk. “On the day of purchase, the producer buys the cattle, but because Meatco takes the purchase price risk and pays for the cattle, the Corporation gives the producer a price limit for which they may purchase,” Abrie says.

If the producer buys an animal weighing 200kg and he rears it to a weight of 400kg, he will then be compensated for the 200kg which he added to that animal.”It’s all about the cattle. The day the producer buys the animal, he will get a starting mass. If he brings that animal to the abattoir for slaughter, we will work on the livedead weight mass, subtract the difference and the farmer is then compensated for the value he added,” Abrie says.

At the moment Meatco is only going to approve Contract Feeding to producers who have physical feedlots for intensive cattle feeding.

Source : New Era