Small-stock sector must reinvent itself
The local sheep-farming industry has shrunk drastically and the Meat Board is deeply concerned about the sustainability of the sector.
Small-stock farmers have been urged to make use of opportunities to improve small-stock marketing.
Market analyst Daniel Motinga said this at a Business7 event at the Windhoek showgrounds yesterday.
He said farmers should move from a 1 000-head herd to a 20 000-head herd and cooperate across farmers' unions and tenure structures to improve production and reproduction.
Together, farmers can invest in genetics, infrastructure, implements and logistics as well as predator control.
“No single farmer can win alone,” Motinga said.
Referring to a recent annual report from the Meat Board of Namibia, Motinga said the common denominator was that local sheep slaughter was no longer financially viable for either the producer or the abattoirs.
Therefore, the 60% levy on sheepskin exports should be abolished to help the sheep industry to recover and put other restrictions on the export of sheep and sheep products.
The Meat Board is deeply concerned about the sustainability of the sheep sector in Namibia, said Motinga.
The local sheep industry has shrunk drastically and sheep farmers have incurred severe financial losses following the government's introduction of legislation in 2004 stipulating that for every sheep exported live, six sheep must be slaughtered locally.
However, Motinga said policy works and even wrong policies incentives could work quite well.
He added that farmers must lobby for the right mix of policy and build a business case. “Emotion will not help.”
He said farmers must also understand the pricing environment and respond to variability.
According to him, regulations are not the cause of the problems in the small-stock industry. “External factors are,” he said.
Key challenges the industry is faced with include policy risks and therefore more emphasis needs to be placed on local value addition.
Another challenge is production risk and this includes low and variable rainfall, expensive input cost, variable grazing, owner-manager production environments, vulnerable infrastructure, predator control and lack of corporatisation and scale economies.
Motinga said during the drought spell there was a 40% variation during the first quarter alone due to distress marketing and condition issues.
“Using data from 2014, it was found that winter carcasses are slightly heavier, but do not necessarily earn more income.”
He explained that heavier carcasses do not necessarily mean more income as prices seem to reset lower in June, but there is limited discrimination in prices among grades A1 to A4.
“In December prices typically peak when farmers go to Henties,” said Motinga.
He further said farmers should be aware that the pricing environment is not controllable and price discovery is not always smooth.
Auctions seemingly do not discriminate drastically against too much conditioning compared to slaughtering at abattoirs.
However for sheep, auctions use abattoir prices as reference and therefore if abattoir prices are weak, farmers should not expect strong prices at live auctions, said Motinga.
“For auctions you never know the price until you have sold off so it is difficult to budget.”
An investigation requested by the Meat Board and conducted by PriceWaterhouseCoopers in 2007 indicated that the Namibian Small Stock Marketing Scheme “did not have the desired effects and results originally intended.” Since the introduction of the scheme in mid-2004, and through its various stages, the export of live sheep declined dramatically. For example, the decline from July 2004 to May 2008 was a disappointing 84%.
ELLANIE SMIT
Market analyst Daniel Motinga said this at a Business7 event at the Windhoek showgrounds yesterday.
He said farmers should move from a 1 000-head herd to a 20 000-head herd and cooperate across farmers' unions and tenure structures to improve production and reproduction.
Together, farmers can invest in genetics, infrastructure, implements and logistics as well as predator control.
“No single farmer can win alone,” Motinga said.
Referring to a recent annual report from the Meat Board of Namibia, Motinga said the common denominator was that local sheep slaughter was no longer financially viable for either the producer or the abattoirs.
Therefore, the 60% levy on sheepskin exports should be abolished to help the sheep industry to recover and put other restrictions on the export of sheep and sheep products.
The Meat Board is deeply concerned about the sustainability of the sheep sector in Namibia, said Motinga.
The local sheep industry has shrunk drastically and sheep farmers have incurred severe financial losses following the government's introduction of legislation in 2004 stipulating that for every sheep exported live, six sheep must be slaughtered locally.
However, Motinga said policy works and even wrong policies incentives could work quite well.
He added that farmers must lobby for the right mix of policy and build a business case. “Emotion will not help.”
He said farmers must also understand the pricing environment and respond to variability.
According to him, regulations are not the cause of the problems in the small-stock industry. “External factors are,” he said.
Key challenges the industry is faced with include policy risks and therefore more emphasis needs to be placed on local value addition.
Another challenge is production risk and this includes low and variable rainfall, expensive input cost, variable grazing, owner-manager production environments, vulnerable infrastructure, predator control and lack of corporatisation and scale economies.
Motinga said during the drought spell there was a 40% variation during the first quarter alone due to distress marketing and condition issues.
“Using data from 2014, it was found that winter carcasses are slightly heavier, but do not necessarily earn more income.”
He explained that heavier carcasses do not necessarily mean more income as prices seem to reset lower in June, but there is limited discrimination in prices among grades A1 to A4.
“In December prices typically peak when farmers go to Henties,” said Motinga.
He further said farmers should be aware that the pricing environment is not controllable and price discovery is not always smooth.
Auctions seemingly do not discriminate drastically against too much conditioning compared to slaughtering at abattoirs.
However for sheep, auctions use abattoir prices as reference and therefore if abattoir prices are weak, farmers should not expect strong prices at live auctions, said Motinga.
“For auctions you never know the price until you have sold off so it is difficult to budget.”
An investigation requested by the Meat Board and conducted by PriceWaterhouseCoopers in 2007 indicated that the Namibian Small Stock Marketing Scheme “did not have the desired effects and results originally intended.” Since the introduction of the scheme in mid-2004, and through its various stages, the export of live sheep declined dramatically. For example, the decline from July 2004 to May 2008 was a disappointing 84%.
ELLANIE SMIT
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