Government’s share in Meatco - negative and positive

WINDHOEK – Government’s recent decision to have a 30 percent shareholding in Meatco might result in it dipping its fingers into the profits of the cooperative.

If the government shares in the profits of cooperatives, it will diminish the returns of the producers and also have a negative impact on producer prices.
This was one of the concerns raised during a feedback session organised by the Namibia National Farmers’ Union (NNFU) on Wednesday evening on the Cabinet’s resolution about Meatco’s future operational structure and legal framework.
The government announced in June that the ownership of Meatco will be vested in a  cooperative with a majority shareholding of 70 percent, and the government will own the remaining 30 percent.
At Wednesday’s meeting, NNFU executive director Oloff Munjanu questioned how the government intends to acquire these shares.
He claimed that government shareholding may imply that it would earn dividends, which might negatively impact producer prices, including for communal farmers.
“What is the rationale behind the shares? Will government partake in profit-sharing, and what does government shareholding entail? How do we manage the relationship between government as a shareholder interested in return on investment (if any), and the producer, whose interest is a competitive price for his product?” he asked.
One of the negative impacts on producer prices is that meat would be dumped locally and prices would drop, resulting in farmers not making profits. This means that loans at institutions such as the Agricultural Bank of Namibia could not be repaid.
Cabinet took an additional resolution that the government’s veto voting right regarding major decisions taken by the company should be vested in the Minister of Agriculture, Water and Forestry.
Munjanu also questioned the role of the Meatco board of directors, and the minister’s influence on their decisions.
With regard to a Meatco council made up of delegates from all 13 regions of the country, Munjanu asked whether such a council would have a political or business interest, and how competent these members are.
The meeting heard that the costs of the day-to-day operations of the council would be too high.
“How will government ensure that all farmers in the 13 regions become members?” Munjanu asked further.
Another Cabinet approval is that the cooperative be made up of commercial and communal farmers, who will sell livestock under the auspices of the cooperative.
However, concern was raised about who these communal farmers are, whether they are Meatco members or those that slaughter cattle, or whether it includes all communal farmers in the country.
Current Meatco rules state that any producer delivering even one head of livestock to Meatco within the last two years is eligible for membership, and includes a two-year contract for one animal slaughtered at any abattoir over a period of one year.
Some attending the meeting felt that government shareholding could have a positive impact on farmers.
Some participants at several meetings on the issue convened in various towns in the country since July 23, which ended on Tuesday this week, felt that the government would then provide free services such as the fencing of land and upgrading of roads and veterinary services to farmers.
The future operations of Meatco will be discussed during a special general members’ meeting scheduled for today. – Nampa

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