CHAMWE KAIRA
Savanna Beef Processors Ltd company, the newly formed meat producer will unlock new export markets and achieve better prices for producers and the whole beef value chain in Namibia, according to Rogers Kauta, one of the producers involved in the setting up of Savanna Beef.
Kauta says the new beef producer intends to promote local value addition in the beef sector by retaining an additional 50 000 plus weaners in the local market for slaughter.
“The export of weaners to South Africa deprives the local economy of job opportunities and premium prices for our beef in the international market. South African beef attracts lower prices than Namibian beef in the international market because our beef is ‘green beef’- grass fed beef.’’
Moreover, Kauta says producers have a positive opinion regarding the Savanna Beef initiative hence the successful raising of more than N$160 million.
“Private capital always follows winners and where you have an exceptional rate of return. Meatco is
doing a great job in the sector but we need more competition to unlock value for all stakeholders in the Namibian beef value chain i.e. rural communities, producers and the Namibian government.”
Kauta maintains that there is room for up to three meat processing plants in the country. He points out that the local market exports about 300 000 weaners to South Africa and says this leaves room for an additional two to three meat plants in Namibia to ensure price efficiencies and subsequent retention of all those weaners for local slaughter.”
He says Savanna Beef competitors are South African feedlots and not Meatco.
Slaughter animals
Some within the meat industry have argued that the local market is small and animals for slaughter are not enough given that Namibia is a dry country hence exporting weaners to South African feedlots.
On the contrary, Kauta states that Namibia has one of the best animal tracing and veterinarian regimes in the world and should be proud of this achievement and applaud all stakeholders that is farmers, rural communities, veterinary services and national government. He says Savanna Beef intends to convert this advantage into real dollars in the pockets of everyone involved in the beef value chain by paying better abattoir gate prices.
Furthermore, another producer, John Muinjo said Savanna Beef will be another player in the market and as such broadens the choices for cattle farmers.
“Savanna Beef came into being on the strength of cattle farmers realising there are opportunities for
them to do better and they are prepared to make substantial investments to attain their vision. Farmers are thus geared to take their destiny into their own hands. Similarly, the fundamental objective of farming for the communal and commercial farmer is to make profit.”
Muinjo says producers of beef believe one has to innovatively assess one’s situation with the national, regional and international context.
“It is time for the Namibian cattle industry to implement strategies where fair and competitive producer prices are realised. Prefeasibility studies conducted and markets inform us that beef prices realized by Namibian beef farmers are much lower taking into account production cost at farm level where the ideology of “home grown” is eminent. Australian beef gets N$115 per kg where we in Namibia get N$65 per kg for beef sold in Europe. Farmers are aware that Namibian beef is a sought after product; they want to get value for money as such.”
Commenting on the size of the market, Muinjo says the number of players in the sector is determined by opportunities investors are willing to exploit.
“Over the last couple of years Namibia experienced new entrants to the beef slaughtering and
processing industry. I believe investors have a strategy of their own on how to contribute to the expansion and development of the national beef sector. “
Muinjo said there are external as well as internal reasons why a large number of weaners are exported.
“While it is important to have a market for weaners, it is in Namibia’s interest to retain some 50 000
weaners for eventual local slaughter. To reverse the situation where weaners currently exported are grown to slaughter ready cattle for local slaughtering, beef price must be attractive. It is of vital importance not to weaken a strength to strengthen a weakness by retaining weaners.”
Steady progress
Savanna Beef has been making steady progress in making a meat processing company that will compete with Meatco and other meat processors in the country.
The company through the Beef Value Chain Forum (BVCF), which was established in November 2020 as the initiators of the project, have continued to make progress in its objective to create a sustainable cattle slaughter and marketing industry to ensure a prosperous future for the Namibian beef industry through profitable beef exports.
An industry-led pre-feasibility study on the Namibian Beef Value Chain, which was concluded in early 2020, highlighted the short-comings and assessed the profitability of beef exports.
BVCF then addressed all outstanding issues; this was then followed-up by a full feasibility study and a bankable business plan, which was approved by the BVCF members and led to the registration of the Savanna Beef Processors Ltd company and kick started the capital raising process. The successes to date of the BVCF is based on the widespread producer support, with presently more than 600 paid up producer members, the company says.
The second round of funding for the new export abattoir kicked off on the 19th of August and lasted to the 9 of September 2022.
Cirrus Capital, the transaction advisors have travelled around Namibia with members of the BVCF task team to present the project’s investment strategy and business plan to the country’s beef producers, following their successful roadshows during the first round.
Savanna Beef Processors says the producer-driven initiative continues to garner widespread and unprecedented support from the Namibian beef farming community, with the capital raising process gaining further momentum during this second round of funding. The result was a further 165 applications received, 54 from existing shareholders and 111 of which were from local beef producers who did not participate in the first round, translating to an additional N$27 million in equity raised by livestock producers during the second round.
Savanna Beef Processors are now representative of 659 producer shareholders. Subscription rate for the overall offer currently stands at 86.8% of the target of N$200 million, and substantially more than the initial target of producer control through raising a targeted N$100 million or 50% from producers.
Through the private placement and the slaughtering rights linked to the shares, Savanna Beef Processors managed to secure a significant milestone of committed throughput of 43 392 animals.
“The overwhelming producer support saw Savanna raising in excess of 80% of its equity need from producers, completely surpassing our greatest expectations. The N$173 million raised has turned an idea into a reality, ever increasing the prospects of Savanna,” Romé Mostert from Cirrus Capital commented.
“This clearly shows that there is a need and desire to improve the profitability of cattle farming. Most of us were overwhelmed by the support that far exceeded our initial target of N$100 million. With this producer driven initiative we should take control over our product for the benefit of the producer with a producer owned facility.” Mecki Schneider, chairperson of Savanna Beef Processors Ltd commented.
He said this initiative will further enhance the “growth at home” concept, with additional foreign currency earnings, further job creation and reverse the declining rural Namibian economy. He says a huge task still lies ahead to bring the project to fruition.
“Be assured that the Savanna Beef Processors board and the Beef Value Chain task team are paying attention to many details with the appreciated support of many advisors and expertise in the field of project management. “
Schneider further said progress has been made with finalising the site and engaging with local and international experts in abattoir design and construction.
“After having assured the financial support from producers the next task is to secure the remaining N$26 million in equity from institutional investors and to raise the debt-portion needed for the project, totalling N$300 million.”
*Chamwe Kaira is a freelance journalist, chamwe@gmail.com
