Remove obstacles to local boiler industry

Staff reporter – The local broiler industry contributed about N$888 million 0.71% directly and indirectly to Namibia’s gross domestic product (GDP) last year and has great potential to increase its contribution to the economy.“This [contribution] could grow to 2% under the right conditions including clear, concise and supportive legislation and increased consumption of poultry products,” Cirrus Capital says.Cirrus conducted an economic impact assessment report commissioned by the local poultry association.Cirrus says the Namibian broiler industry has great potential for the country in terms of job creation, food security, and industrialisation, but it faces many challenges. Currently it has the benefit of import restrictions – a measure aimed at establishing a local industry - however the South African Poultry Association has dragged the matter to court where it is currently bogged down. Membership of the Southern African Customs Union (SACU) also makes dealing with anti-competitive behaviour and dumping very difficult. Uncertainty around the current legislation hampers the development of the industry, as new entrants fear their investment may be jeopardised, a statement issued by Cirrus says.“Notwithstanding these challenges, the broiler industry in Namibia has performed exceptionally well,” it states.Consumption, priceNamibia lags far behind South Africa in annual per capita consumption of chicken, with roughly 13kg consumed locally compared to South Africa’s 38kg. Local consumption stands at 2 500 tonnes per month, of which Namibia produces 1 900 (67%). Restrictions limit imports to a maximum of 1 500 tonnes per month, but the current protection sees importers trying to obtain the most quota instead of joining the local industry and moving from imports to local poultry purchases.A survey conducted in the retail market shows that the shelf price of imported poultry products is only slightly lower than that of local products (or in some instances more expensive), thus the benefit of imported poultry does not pass through to the consumer.The domestic market has also ensured other types of poultry products, including fresh chicken, chicken livers, cleaned feet, etc., could enter the Namibian market. Many of these products are very cheap sources of protein for Namibian households.“Domestic demand for chicken meat is on the rise and the increase in demand is currently catered for by imports. However, local SMEs have started adding capacity too and Namibia could be self-sufficient by the end of 2019,” Cirrus says.Chicken remains the most affordable of all the sustainable protein sources (excluding fish, where overfishing plagues the local industry’s sustainability) and import restrictions have seen a stabilisation of local prices, coming in line with those of South African products. Figures indicate that Namibian chicken prices remain fairly flat and not contribute to rising inflation.CostsProduction input costs are higher in Namibia than South Africa, and Namib Poultry Industries (NPI) has streamlined its processes to be exceptionally efficient. The risk of water shortages in the long term has been reduced by the investment of N$11 million in a reverse osmosis filtration system.Compared to South Africa, water and electricity costs at the abattoir are three and two times higher in Namibia, respectively. Namibia has the highest electricity costs in sub-region.However, in spite of these challenges, the broiler industry remains very important for Namibia. Economic importanceNPI currently employs 665 people, of which 513 workers are unskilled, contributing to the welfare of roughly 2 600 people. Through Namib Mills and Feedmaster, a further 96 indirect jobs have been created by NPI in the value chain (feed supply and national cold storage distribution).Cirrus assessed the multiplier effect of the existence of the broiler industry in Namibia, saying it is “substantially larger than the direct output from the industry would suggest”. Using the ‘meat processing’ structure as a proxy in the Social Accounting Matrix, Cirrus found that the multiplier effect stood at 4.42 times. Thus, “for every N$1 output the industry generates, the overall impact on the economy is N$4.42."Taking into account import substitution (using the reduction in chicken that would otherwise have been imported) and the increase in other imports (inputs in NPI’s production processes), for every N$100 spent on local chicken, N$56.20 stays in the local economy rather than flowing to South Africa to pay for chicken imports.“NPI directly contributed N$201 million to the Namibian economy in its 2017 financial year or 0.12% of the GDP. The local industry also contributed indirectly through its input purchases and employment, as well as by substituting local production for what would otherwise be imported. “Taking these into account, the total contribution in 2017 amounts to N$888 million or 0.71% of GDP. While this figure may seem insignificant, the Namibian economy has grown on average 4.05% a year since 1990. This means that NPI alone makes up around 18% of a single year’s growth,” Cirrus says.Cirrus also modelled supply scenarios to determine their impact on GDP: if Namibian consumption was increased to South African levels and Namibia could produce the total demand locally, the contribution to the GDP could be just shy of 3%.SupportIt is therefore important that the industry is supported and developed further. By producing our own chicken, food security is enhanced with a cost-efficient source of protein. With local production, Namibia stands the chance of becoming a price maker and resistant to external supply shocks, such as the recent outbreak of bird flu in South Africa.Government must catch up with private sector development in terms of the legislation it writes and the finalisation of the Namibia Board of Trade Bill. This bill, which will establish the Namibia Board of Trade as the national body required under the 2002 SACU Agreement, is delayed with no real interim relief in the near future. The bill will deal with issues related to unfair trade practices, tariff investigations, and tariff setting. Without it, SACU membership is prohibitive in terms of protection for the industry.An environment conducive to local production, will, according to Cirrus, include clear and concise legislation and will be far more effective than trying to control imports.

Remove obstacles to local boiler industry

Kommentaar

Republikein 2025-12-22

Meld asseblief aan om kommentaar te lewer

Remove obstacles to local boiler industry

Kommentaar

Republikein 2025-12-22

Meld asseblief aan om kommentaar te lewer

Intekening vereis om toegang tot inhoud te kry. ×

MELD AAN

Advertensie

Intekening vereis om toegang tot inhoud te kry.