Recently appointed Chief Executive Officer of Meatco’s Northern Communal Area Subsidiary (Pty) Ltd, Kingsley Kwenani, has announced that the company, has come up with a short-term turnaround strategy to ensure the viability of the business based in the northern communal areas.
The development comes as the Meatco subsidiary, has been a loss-making operation attributed to its business environment, factors which needed to be addressed for the long term survival of the unit.
“I needed to find out what exactly we can do to turn the situation around. I did this by developing the Meatco NCA strategic policy. One issue identified was that the current operation has market access limitations. Second, there is no market for the hind-quarter products, which produce high-value yields compared to the current NCA fore-quarter products market. This current arrangement is not helping Meatco because hind-quarter products yield higher returns,” said Kwenani.
He said because of the challenges faced by the business , he has proposed various initiatives aimed at bolstering the business.
“I came up with short-term turnaround strategies to create a more viable business operation such as:Improving the market share from slaughtering 32 animals per week to slaughtering 80 animals per week.Deal with the quality of the animals to better compete in that market (focus on AB and B grades and establishing Backgrounding initiatives).Cut costs within the system, mainly on transportation and administrative costs. Ensure product diversification because although there is a good market for fore-quarter products in the NCA, it is highly sensitive because of the margins that are small, as many suppliers operate in this high-volume market. Increase the sale price of offals from N$376 to N$1 080 to get maximum value from this high-volume product, which Meatco now sells as a fresh product.”
Kwenani said to make profit, the company needs to increase yields for the hind-quarter products and get higher returns through product diversification. “We are trading at approximately 1-2 percent of the hind-quarter sales while the desired amount is 5 percent. Reaching 5 percent will balance our business model through the increased yields,” said Kwenani.
Currently the Meatco NCA operations are making use of the Mobile Slaughter Unit (MSU) and Bonanza Oshakati. “Meatco NCA slaughters the cattle at the MSU and transports the carcasses to Bonanza for deboning and value-addition, and sale of the meat products.
The subsidiary’s mandate is to have a good functional strategy aimed at unleashing the full potential of the NCA’s livestock marketing sector.”