Windhoek — The government is concerned about the imminent termination in 2014 of the provisional preference in the Interim Partnership Agreement with the European Union, for the export of the country's meat products.
The country's meat exports are limited to South Africa and the European Union and Norway. That is why the government has embarked on a market diversification desktop study to explore export opportunities elsewhere.
According to the Director of Planning in the Ministry of Agriculture, Water and Forestry, Bernd Rothkegel, Cabinet recognised that future reliance on one major export destination is not in the interest of the country and that no single export destination should be responsible for more than 50 percent of all exports of a specific commodity.
"So that we are not held hostage by foreign countries wishing to determine our trade agenda," Rothkegel said at the presentation of results of the market diversification study and the master plan for increased meat production from the Northern Communal Areas (NCA) on Friday.
The objective of the diversification study funded by the Finnish government was to identify and analyse alternative export markets for Namibian red meat, besides the traditional three markets.
The study carried out by the Polytechnic of Namibia, the University of the North in South Africa and the Namibian government, identified top 12 export opportunities, including in descending order - Hong Kong, Singapore, the United States, Switzerland, Canada, Bahrain, Malayasia, Kuwait, Saudi Arabia, China, Mexico and Qatar.
Three other potential export opportunities, including Russia, Indonesia and Iran, were also analysed.
Beef was more favourable in Singapore, Hong Kong, Switzerland, USA, Kuwait, Russia, Malaysia, Saudi Arabia, Canada and Bahrain, while lamb, mutton and goat was favoured in Hong Kong, Singapore, Canada, Malaysia and Qatar.
Offal and meat preparations were favoured in Hong Kong, USA, Singapore, Switzerland and Mexico.
According to the study, as production classification used only allows for the identification of broad opportunities, further in-depth research is needed on local preference for specific meat cuts and characteristics.
The financial attractiveness of the identified export opportunities provide further guidance on the potential profitability and viability of diversification endeavours of the Namibian red meat sector.
The relative price competitiveness of Namibia with regard to the potential product-market combinations were estimated. The analysis showed that Namibia is price-competitive in almost all of the selected product-market combinations for beef products.
Only in a few cases are Namibia's export prices higher than the average import price and only in one case is its price higher than the higher-bound price. The results of the analysis on the price competitiveness for lamb, sheep and goat meat showed more variations.
However, frozen carcasses of sheep was the only product for which Namibia recorded no price competitiveness in any of the selected markets. It was also evident from the analysis that the price margins in some markets indicate the demand for significantly high-valued products, for example, in Hong Kong, Singapore and Switzerland.
The study also revealed opportunities for the disease-prone NCA, as there are countries that do not require strict foot-and-mouth disease-free status for meat imports.
These countries include Hong Kong, Malaysia, Bahrain, Saudi Arabia, China and Qatar. Some regional African markets were also identified according to the outcomes of the decision support model, as their sanitary and phytosanitary requirements are relatively less stringent.
However, there are key strategic imperatives for the successful export diversification by the red meat sector. These include the need for efficient and aligned procurement in the supply chain, improved coordination of industry role-players, the stipulation of the sector's adaption of best practices regarding technology, innovation and employment.
Other key strategic imperatives include the vertical integration and geographic expansion of red meat processing, the adequate management of animal health, as well as product development and differentiation.
However, the study suggests that the identified market opportunities do not necessarily imply higher profits and better market foresights than the current traditional markets of South Africa, the European Union and Norway.
"Determining profitability and competitiveness of export markets is a dynamic process that requires primary consumer data, a block test and detailed cost structures of the meat supply chain, which fall outside the scope of this study," the study added.