The Meat Corporation of Namibia (Meatco) - 2013

MEATCO is surviving the drought and driving change

Meatco Surviving the drought and driving change

Meatco operates to the highest international standards

MEATCO is surviving the drought and driving change After the worst drought for decades, Namibian beef giant Meatco has had to radically overhaul its operation and is now playing hardball as it looks to transform the industry Written by: Joseph Wilkes and produced by: John Holliman >>> 2

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amibia’s foremost meat company Meatco is currently transforming its procurement division and beginning to drive monumental change in the industry as a whole.

The company, which runs two factories and exports 92 percent of Namibia’s beef (one of the major industries of the country), has had to make huge changes to its structure following year-on-year cattle decreases resulting from a changing business environment.

One of the worst droughts in the nation’s history compounded the problem over the past two years, with significantly decreased cattle numbers predicted for next year and a marked decrease in the quality of individual cattle.

Meatco has brought in a new board of directors, laid off more than 400 staff, appointed a new executive head of procurement charged with transforming the department, introduced radical new changes to its treatment of supplier farmers, laid foundations in expanding into the global market and began playing hardball with the government over changes it wants to see in Namibia’s meat industry.

At the centre of the overhaul is Chief Executive Officer (CEO) Vekuii Rukoro, who joined in March of this year.

He said that the overcapacity in the industry, a changing business environment and more recently a reduction in the quality of the cattle because of the drought, has impacted on the price the company is able to realise in the market. This has tempted cattle farmers into other businesses, such as tourism and game farming.

A coping strategy The company is now working on a number of initiatives to tackle the effects of the drought. It is realigning its whole production mode, cost structure and has reduced staff numbers from 1,500 to 1,040.

Bosses have also begun to look at some of the company’s business units. Shortly after joining, Rukoro closed down a sheep plant that was running at a loss of close to one million Namibian dollars a year before “jacking up” Meatco’s wholesale operation and beginning a push towards more involvement in the local market.

Rukoro said: “For a number of years Meatco focused too much on our external high value markets and to an extent neglected our local market. That strategy has changed and over the past three months we have targeted the local market quite significantly, via our wholesale division. In fact as 3

Meatco Surviving the drought and driving change

Packaging facilities

Meatco works closely with local suppliers to secure better working relations

The company has had to make huge changes to its structure after a difficult period caused by the worst drought in decades’ 4

we speak we have, in a period of three months, already captured 22 percent of the local market.

“The wholesale division is doing exceptionally well, it is very profitable and whether it is the wholesale, the two factories, the canning operation or the tannery, all are doing very well.

“That is the way we want to keep things. The other focus area is our procurement division which is really where the tyre hits the tar in terms of competitiveness with our competitors, there the marching orders to my new executive is ‘it is no longer business as usual’, but to become exceptionally competitive to the point of being ruthless with our competitors within the next two years and to make sure we are the dominant player in the market place.”

A fresh approach A number of strategies and policies have been reviewed since Rukoro joined and new ways of doing things are being looked at with fresh personnel being recruited.

He is also spearheading a drive to transform Namibia’s meat industry and create more opportunity for growth. He has been travelling up and down the country engaging producers, leading farmers’ liaison meetings and detailing

Seated from left to right are: Ms Sophia Kasheeta, Ms Clara Bohitile (Chairperson), Mr Martin Hilbert (Vice Chairperson) and Ms Paulina Kujandeka. Standing at the back from right to left are: Mr Vekuii Rukoro (new CEO), Mr Arne Gressmann, Mr Ripanda Meroro, Mr Matthew Shikongo and Mr Kobus du Plessis (outgoing CEO) a radical change in the way suppliers are going to be treated.

The CEO uses a banking analogy when describing his vision. In the same way that a customer of a bank is given either a platinum, gold or silver account depending on, as he said, “what they bring to the party”, so a farmer will be treated more or less favourably depending on the volume of cattle he supplies to Meatco and its competitors.

Rukoro said: “If somebody gives Meatco 400 cattle per year and somebody else just one load of 36 per year, clearly I can’t treat those two the same. I told the famers that Meatco will give different

prices to different farmers, that your neighbour might be getting two dollars per kilo more based on his relationship with Meatco and it will depend on his commitment to us relative to yours. A farmer might give you one cow and then 200 to your competitors but then he expects the same rights and privileges, that is not going to be the case anymore.

“This is totally new and it almost goes against the grain because up to now it has been a situation of you are just a farmer and you are a member of Meatco and whether you deliver one cow a year or 100 cows on a consistent 5

Meatco Surviving the drought and driving change basis you were treated equally.”

Meatco is also looking at integrating backwards into the value chain to secure a core number of its own cattle in the future, instead of being overly reliant on farmers.

Rukoro said he is “exceptionally optimistic about the future”, but there are a couple of challenges posed by “serious policy, structural and environmental impediments” which are “well beyond” the company.

Industry transformation Rukoro wants to drive change in

these issues that he says need to be addressed by the industry as a whole, as well as by government.

These, he says, have “bedevilled agriculture for a long time”.

One of the things Meatco wants to see changed is the rules around what is known in the country as the Norway Quota. Namibia has the ability to export 1,600 tons of beef to Norway, an exceptionally lucrative market as it pays the highest prices for Namibian beef.

According to Rukoro, despite the fact that Meatco slaughters and exports 92 percent of the

The company wants to see the maximum benefit for the greatest number of producers

6

Vekuii speaks at a farmers’ meeting

I am happy and satisfied that we are doing things in terms of best international practice and we can stand on our own” —Vekuii Rukoro, Meatco CEO

Meatco invests heavily in Corporate Social Responsibility projects beef to Norway, the quota is split 50/50 between it and a small-time competitor which is responsible for the other eight percent.

“Clearly that is totally unfair and inequitable,” said Rukoro.

“Norway intended that the maximum benefit should go to the greatest number of Namibian producers and had this allocation taken place on the basis of equitable distribution – in other words, based on the throughput of factories – we would have been able to actually 7

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“When I applied for the quota for next year, I maintained very strongly that the status quo cannot continue; it is unfair, immoral and inequitable and this has to come to an end otherwise I may have to resort to other legal measures.”

Rukoro added that for the first time the entire industry is “up in arms” and supporting this position, with even ministers in government now “also talking my language, saying they actually cannot defend 8

Agriculture is the beating heart of Nam this position and don’t understand why it was taken in the first place”.

There are other such “totally inexplicable decisions” and structural changes that Meatco is now pushing for action over.

The world stage Meatco has recently passed stringent audits by such big names as McDonald’s restaurant and the British Retail Consortium. The company is already EU certified with recent audits by Russia and China leaving the door open for it to push for access to the markets of major nations on the world stage.

Rukoro added: “I am happy and satisfied that we are doing things

hange STATISTICS

Industry: Meat Founded: 1986 Headquarters: Windhoek, Namibia

mibia in terms of best international practice and we can stand on our own, we are currently a more than one billion dollar (Namibian dollars) organisation but that will increase, incrementally.

Certainly in the not too distant future doubling that figure is not ruled out at all.�

The tough talking company also has a softer side, the Meatco Foundation is a dedicated institution run in conjunction with international partners that spends money in rural areas of Namibia.

It helps establish infrastructure, provides clean drinking water and erects cattle pens to assist poor farmers, among other things.

Key People/Titles: Vekuii Rukoro, CEO Products: Abattoirs, exports Revenue: Namibian $1 billion Employees: 1,040 Website:

www.meatco.com.na

Visit us online:

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Meat Corporation of Namibia Ltd Meat Corporation of Namibia Ltd. P.O. Box 3881, Windhoek, Namibia Tel (+264) 61 321 6400 Fax (+264) 61 321 6401 www.meatco.com.na

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