Drought stricken sheep farmers pray for new exporting scheme- Namibia

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As the year draws to a close with poor prospects of rains, Namibian sheep farmers in the south have all their hopes pinned on a revised and improved sheep exporting scheme early next year.

This is if they are to survive, as sheep marketing keeps declining and price differences between South Africa and Namibia keep increasing. The Meat Board of Namibia (MBN) has made various recommendations after a series of consultations with all role players. Option 1 is the total abolishment of the Sheep Marketing Scheme (SMC). Option 2 is no cost to value chain: alternatively add an equal price condition to the SMC (sheep exports will only result if Namibia abattoir prices equal South Africa abattoir prices) applied through export permit; or alternatively add an abattoir cost difference condition to the SMC (sheep exports will only result if Namibia abattoir prices equal those of SA abattoir prices) applied through export permit.

Option 3 entails cost to value chain: alternatively, abattoir cost difference imposed through Meat Board of Namibia special levy; or, alternatively abattoir cost difference imposed through Ministry of Finance levy. General Notices No. 115 of June 1, 2004 and Government Notice No. 129 June 1, 2004 to be repealed, and the sheep industry be granted a period of 12 months graze for restoration. Other options are that the MBN Special Export Levy, based upon the cost difference between NAM Export Abattoirs and RSA higher throughput abattoirs – expressed as % of the MBN Standard Value of 3.39% -- be imposed on the export of sheep; that the special levy to be applied for $ Value Adding, DVS support, etc.  

The date of implementation will be gazetted for one month in advance, and special value added levy will only be applicable for four years. Deputy agriculture minister, Anna Shiwedha, says government would assess the viability of the sheep exporting scheme to mitigate losses.

Urgent relief for sheep producers is a huge priority, as sheep production decreased in the past 15 years: from about 1.2 million per annum to just 700 000 in 2017, contributing to the shrinking of the small stock industry by almost 50 percent. The Livestock Producers Organisation (LPO) has pointed out to the Meat Board of Namibia that more job opportunities were destroyed in the primary sector of the industry, compared to what was attempted to be created in abattoirs by implementing the system in 2003. The LPO made it clear that producers cannot be held responsible for the subsidisation of others, or for financing the industrialisation of Namibia.

Producers have been raising their voices and expressing their dissatisfaction with the scheme for years, and some changes were made to the scheme but it never lived up to the producers’ expectations. They have claimed that the “ill-conceived” scheme incurs over N$177 million in losses per annum, and that it has been a source of concern for local farmers since its introduction.

Producers’ concerns about the scheme date back to 2012 when a special report was compiled, which pointed out that farmers and workers have suffered serious economic losses attributed to the scheme, asking if these farmers would be compensated.

The scheme, which was introduced to stimulate value addition to sheep and sheep products locally, currently works to export a ratio of 1:1 after it was reviewed from the 15%-30% “ad valorem flexibility levy” in 2013.
The slaughter to export ratio implies that the producer (farmer) would be permitted to export one sheep after slaughtering one in local abattoirs.

The sheep scheme was introduced in 2003 with a purpose of benefiting the producers and the national economy through value addition and support for the Growth at Home strategy.

It was perceived that the scheme would contribute to employment creation, and to support the throughput of local abattoirs through the reduction of small stock exported to South Africa on the hoof.

 “There are many factors that can directly and indirectly contribute to the alleged losses; for instance: drought, unfair competition, and shipping of livestock on the hoof to South Africa,” the deputy minister stated.

The review exercise was thus necessary to address the challenges identified over the years, adding that the exercise will “objectively look at the viability of the domestic marketing of small stock, based on the production cost, revenues, and profit margins,” Shiwedha explained.

Through this exercise, the ministry would also determine the viability of small stock abattoirs, as well as tanneries, focusing on processing costs revenue and profit margins.

“The result of the planned exercise should advise the government on win-win interventions in the interest of the country and the industry as a whole,” she noted.