Windhoek — The Managing Director of First National Bank, Vekuii Rukoro, has warned farmers they could expect higher agricultural production costs following the recent increase in oil prices and the expected increase this week.

Speaking last Friday at an information day for large stock producers at the Windhoek Show Grounds, he said the agricultural sector could face the same dilemma as the fishing sector because of the steep increase in fuel prices that at times heavily affect production costs.

He said Namibia is expecting oil prices to remain high over the next 12 months due to geo-political factors, and strong demand for oil from China and India.

He noted that currently the fuel price had reached more than U$70 per barrel, and, given the current trend, it could reach U$100 per barrel - which would be disastrous. Rukoro added that except for the increase in oil prices, the Namibian economy is characterized by rising interest rates and so far had seen an increase of 100 basis points since June 2006 and more interest increases were expected over the next twelve months.

During his presentation, Rukoro also gave an outlook on recent economic developments and current conditions.

He said the Namibian economy had not escaped the international financial volatility of the past year as reflected in a volatile Namibian Dollar against other major trading currencies.

"The exchange rate of the N$ versus the U$ is expected to weaken and remain somewhat volatile during the second part of 2006 and into 2007 as foreigners sell emerging market financial assets, and commodity prices decline".

The MD added that the effect of slow global economic growth would weaken demand and lead to poor economic growth in Namibia and therefore expectations are that the Namibian economy will only grow by 3% in 2006.

At the same event, South African-based professor Kobus Laubscher made presentation titled 'A Strategy Map for Profitable Farming'.

He advised farmers to fully take advantage of the good prices for weaners, as the prices are likely to drop in the future.

He said the current prices are not normal and farmers should use the good returns for weaners to pay off their debts and to save for bad times. He advised local farmers to plan properly if they wanted to change from ox to weaner production. Laubscher said farmers should learn to plan ahead and seriously address the threat of bush encroachment, as it will seriously affect the carrying capacities of farms and ultimately their productivity.

Wolfgang Raith from Farmers Hartlief Consolidated Meats briefly spoke about his company and said that on August 18, last year, the Hartlief and Farmers Meat Market group of companies had announced their merger to consolidate the synergies of the two businesses into one effective force aimed at serving all segments of the Namibian meat industry.

"The process of vertical integration enabled the company to focus on value-addition, which is in line with the Namibian Government's Vision 2030 and because it makes perfect business sense".

Raith said the Namibian livestock producer forms integral of their company and they are the cornerstone of the value chain for meat.

"Through their investment in the FHC group, producers ensure that they form part of the livestock value chain and the FHC pays the producers market-related prices or better".