MEAT producers selling slaughter animals that are not EU compliant because of a new '40-days regulation' will receive non-EU prices (a 25% cut in price) from Meatco.
A directive on the '40-days requirements' was issued by the Directorate of Veterinary Services (DVS) on February 4.
The 'residency requirement' states that only cattle born south of the Veterinary Cordon Fence (VCF) or those who lived south of the fence for more than 90 days are EU compliant. Also, such cattle must have lived on a farm south of the VCF for more than 40 days without contact with non-compliant animals.
Although the 40/90 days regulation has been in effect since November 2011, the interpretation of the 40-days regulation changed on February 4.
Before February 4, animals destined for the export market had to remain on one holding for 40 days prior to slaughter. Since February 4, DVS interpreted the regulation also to mean that a compliant animal that comes into contact with an animal that is not compliant will lose its status.
According to Meatco's manager of communications, Mario Poolman, the company lost nearly N$1 million in a single day due to animals losing their EU export status because of the new interpretation of the regulation.
This is because the regulation was implemented with immediate effect with no prior warning, and so Meatco decided to absorb the losses until tomorrow to allow producers some time to adjust to the new regulations, he explained.
According to a letter from the Namibia Agricultural Union, the enforcement of the strict requirements was in preparation for the EU inspection which started this week to ensure that animals which are marketed to the EU comply with regulations.
Poolman said a dual price system was introduced by the company in October last year where non-compliant cattle would be bought at 25% less. This reasons for this measure were communicated to producers long before the time.
According to him, income returns from exports to the EU averaged about 40% higher per head than for cattle not exported to the EU. That meant that EU export prices paid for non-compliant cattle were being subsidised by compliant cattle exported to the EU. It was for this reason that Meatco decided to bring in the 25% penalty in order to benefit the producers who are EU compliant.
"Since the original implementation of the 40/90 day requirement in November 2011, we paid producers the same price and absorbed all losses for the EU export non-compliant cattle," Poolman explained, "but this changed when we introduced the dual price system in October last year."
Poolman explained that although Meatco has measures in place to verify the EU export status of animals before they arrive at the abattoir, the responsibility still lies with the producer to confirm and verify the EU export status of their animals with the NamLits traceability system which is administered by the Meat Board.
The 25% penalty on non-compliant animals is fuelling the speculation by producers that Meatco is forcing them to carefully reconsider taking their animals to open auctions where they could run the risk of coming into contact with non-compliant animals.
Poolman said Meatco did not impose the 40-days rule and also cannot subsidise non-compliant animals with income from animals that do comply.
"This is not fair to producers that go through the trouble of making sure their animals comply with the regulations. Its also basic business, the product fetches a lower price in the market so we can't pay the same prices for those cattle," he said.
Poolman agreed that the regulation provided another barrier to the market for producers, making it more difficult for them to sell their cattle to Meatco.
"This is definitely not in Meatco's favour," he said.
The DVS directive led to a meeting with the permanent secretary of agriculture, Joseph Iita, together with the permanent secretary of trade and industry, Malan Lindeque, last Friday in which the industry, including Meatco, expressed concern about the dire consequences of the extended 40/90 residency requirement. It was here where the industry called for the interpretation of the regulation to be reviewed. Experts believe that the regulation could be interpreted in a way that will be less damaging to the industry.