DRAFT TERMS OF REFERENCE FOR CONSULTANCY SERVICES TO ASSESS AND PRESENT A REPORT ON THE COMPETITIVENESS OF NAMIBIAN EXPORT BEEF AND SHEEPMEAT (Chilled and Frozen) VALUE CHAINS VERSUS INTERNATIONAL COMPETITORS IN SIMILAR MARKETS AND TO MAKE RECOMMENDATIONS TO INCREASE THE COMPETITIVENESS OF THE NAMIBIAN MEAT INDUSTRY 1. Introduction The Namibian meat industry is challenged by increasing complexity, operational demands and rising expenses brought about by globalisation, increased competition, skewed trade policies, skilled staff shortages, environmental factors and changing consumer needs. It is of utmost importance that the meat export value chain delivers to participants acceptable returns and confidence to further invest. The meat industry has in recent years seen decreasing livestock numbers marketed (Figure 1 & 2) as well as diminishing real producer prices (Figure 3 & 4) which can be attributed to a variety of reasons. Head of Cattle

600 000

LONG-TERM TREND IN MARKETING

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LIVE EXPORTS NVCF SLAUGHTERING

SVCF SLAUGHTERING BUTCHERS

Figure 1: Long term trend in cattle marketed 1

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Long Term Sheep Marketing Trend

5 Year Moving AVG Log. (Total Marketing)

1200000 1100000 1000000 900000 800000 700000 600000 500000 0

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Figure 2: Long term trend in sheep marketed

Namibian Beef producer Price (B2) Vs International Prices 80.00 60.00 40.00 20.00 0.00 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nam B2

RVAV B2

Argentina

Brazil

Australia

EU Steer

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Figure 3: International cattle carcass price comparison

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Figure 4: International sheep carcass price comparison Namibia’s meat export markets currently entails exporting de-boned chilled and frozen beef to the European Union and South Africa as well as the lucrative Norwegian market, and sheep carcasses, livestock and processed meat mainly to South Africa. Whilst foreign trade agreements with the EU and Norway offer reduced import duty and tariff structures, the Namibian meat industry is still been confronted by fading confidence, limited investment and diversification to other trades. These trends are observed against the background that the overall financial returns generated within the EU market are higher than corresponding returns generated on the South African market, which amounts to even a third half of the premium returns achieved within the Norwegian market. This advantage is further complicated by the fact that Namibia’s international competitors such as Australia, Brazil, Uruguay and New Zealand (sheep meat) are growing in stature. Similarly, world demand for meat is growing. To ensure that Namibia is able to turnaround the decreasing trend in the annual marketing of livestock numbers, it needs to produce products more competitively than its larger international competitors. It is thus important and necessary to assess the competitiveness of the Namibian meat industry and to develop strategies to stay nationally and internationally competitive. The Meat Board is herewith inviting a CONSULTANCY to conduct an assessment of AND present a report on the competitiveness of the Namibian export beef and sheep meat value chains versus international competitors in similar international markets and to make recommendations on how to increase the competitiveness of the Namibian meat industry taking into account and addressing the unique challenges faced by the Namibian meat industry. 3

2. Goal of the Consultancy The goal of the Consultancy will be to assess, compare and report on the competitiveness of the export value chain of Namibian beef and sheep meat (chilled and frozen) to Norway, European Union and South Africa with the beef and sheep meat export value chains of international competitors, South Africa, Australia, Uruguay, New Zealand in similar markets and to make recommendations on actions to increase the competitiveness of the Namibian industry. 3. Specific Objectives of the Consultancy The objectives of the Consultancy are to: a. Describe the Namibian meat export industry structure and characteristics; and evaluate the contribution in volume and value of the different market destinations for Namibian beef and sheep meat; b. Describe the income, cost and profit structures of each actor of the respective meat value chains; c. Benchmark such value chains against international competitor countries, South Africa, Australia, Uruguay and New Zealand; d. Recommend and substantiate clear and practical solutions (actions) to implement and suggest policy options to improve competitiveness; and e. Contribute to an understanding of and consensus on opportunities for, and challenges to increase Namibia’s meat industry competitiveness. 4. Specific Activities The consultancy should consider and present in the report the following activities: a. Give an overview of the current world meat trade in terms of meat trade flows, world meat demand and consumption and consumer changing patterns, meat prices and products; b. Describe the characteristics of the Namibian meat industry including the Macro and Micro economic Policy Framework; c. Review previous work/studies for research already conducted and prevention of duplication – only report on relevant issues. d. Assess the current competitiveness of the meat supply and demand value chain (chilled and frozen) with specific emphasis on the production, manufacturing (slaughtering and processing), marketing and input sectors through a comprehensive value-chain analysis; e. Benchmark Namibia’s meat value chains against similar value chains of competitive countries South Africa, Australia, New Zealand and Uruguay with regards to: 1. Production (i) Size and Carrying Capacity (ii) Land Price versus Stocking Rate (iii) Production per Unit areas (kg/ha) 4

(iv) (v) (vi) (vii) (Viii) (ix)

Population and turnoff Cost and Revenue per farm unit/hectare Cost and revenue per head produced Cost and revenue per kg produced (kg/live weight) till offloading at abattoir Livestock price comparison Input and Financing costs

2. Processing (i) Comparing processing costs (Transport to market, Interest, Depreciation, Repairs & Maintenance, Industry & Inspection Charges, Services, Marketing, Consumables & Packaging, Labour) (ii) Labour productivity (iii) Co-product values –inclusive hides & skins, offal, carcass meal etc. (iv) Comparing Revenues (FOB) (v) Input and Financing Costs 3. Market and Trade (i) Comparative prices for chilled and frozen products (wholesale & retail) (ii) Market Access Arrangements (iii) Tariff comparisons (iv) Value addition opportunities (v) Input and Financing costs (vi) Comparison of cost from producer to consumer: primary production, value addition, logistics, wholesale, retail. 5.

Critical Issues for success

Evaluate Namibia’s competitive position in terms of: a.

Animal disease status

b.

Consumer expectations

c.

Supply chain efficiencies (The network created amongst different companies producing, handling and/or distributing a specific product).

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e.

Risk of market entry (Porter five forces)

f.

Market access – (Agreements and quality assurance schemes (FAN Meat Scheme ect) Opportunities

Determine the opportunities to the meat industry in terms of increasing its competitive potential (Innovation and branding, Marketing channels, Production cost, Input cost, Supply chain, Trade barriers). 5

7.

Modelling

Revise the Meat Board Microsoft Excel model in order to be updated quarterly by the Meat Board to evaluate the competitiveness of Namibia’s existing value chains by benchmarking (producer prices and relevant factors) against similar value chains of Namibia’s major competitors. 8. • • • •

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Outcome Description of Namibia’s competitive position per commodity and product; Clear recommendations to the Meat Board and Government on actions to enhance the competitiveness of the Namibian meat industry in international markets; Advise to the Meat Board on innovation and branding to enhance the competitive position of the meat industry; and Advise to the Meat Board and Government (Ministry of Industrialization, Trade and SME Development (MITSD), Ministry of Agriculture, Water and Forestry (MAWF) and Ministry of Finance (MoF)) on future macroeconomic policy guidelines with respect to increasing the competitiveness of the Namibian meat industry at a public workshop. Report

The report should be drafted and finalised through discussions with the Abattoir Association of Namibia including individual export abattoirs, Namibia National Farmers Union, Namibia Agricultural Union, Meat Board of Namibia, MAWF, MITSD, MoF, Namibia Manufacturers Association and Emerging Commercial Farmers Union. The report should be concise and limited to significant issues. The main text should focus on findings, conclusions and recommended actions, supported by summaries of data collected and citations for any references used in interpreting those data. Detailed or uninterpreted data are not appropriate in the main text and should be presented in appendices or a separate volume. Unpublished documents used in the assessment that may not be readily available should be assembled in an appendix. Every statement should, if required by the Meat Board to be supported with facts (statistics, quantities and amounts). The executive summary should highlight the significant findings and recommended actions (in order of importance), and should not be more than 10 pages in length. The report should be organised according to the outline below: • Executive summary • Contents page • Definitions of technical terms and list of abbreviations • Introduction • Terms of reference • Approach to study 6

• • • • • • • • • • • • • • • • • • • •

Aim and objectives of the study Methodology Assumptions and limitations Overview of Namibian meat industry Quantification of the meat value chain SWOT analyses Competitor country value chain analyses (Quantitative research) Analysis and findings as per the different components Assessment Evaluation Competitor value chain modelling Incomplete or unavailable information Opportunities for primary and secondary value addition Conclusions and recommendations List of compilers Itinerary List of people met Acknowledgements References Appendices
The report is to be presented in the English language without spelling mistakes in the A4 format.
Drawings and sketches are to be presented in A4 format and are to be bound into the report.
Draft and final report(s) shall be submitted in 3 hard copies and in 1 electronic copy, as per phase.
The consultant shall submit his/her draft and final report(s) to the client on CD.
The consultants shall ensure that all reports are done according to the University of Harvard standard on the following application software: Word Processing: Microsoft Word Spreadsheets: Microsoft Excel

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Organisation of the consultancy a. Submission of the quote The consultants are required to submit a quote, inclusive of payment structure and a time schedule to the General Manager of the Meat Board, by a date determined as per public advertisement. The quote must cover the full Terms of Reference (Report and Workshop) including all disbursements and VAT, and no revision of prices will be considered. The quote must be valid for a period of thirty (30) days. 7

N.S. Payment will not be affected if the reports are not approved by the Meat Board. The final payment will be made once the final report is approved by the Meat Board board. b. Appointment The Consultant shall be required to make a presentation of its understanding of the Terms of Reference (Inception Report). The Consultant shall be appointed by the General Manager of the Meat Board of Namibia as per contract. c. Approval The Final Report shall be approved by the Meat Board of Namibia, board only. d. Reporting The Consultant shall be reporting and attend meetings on a regular basis to a Steering Committee convened and chaired by the Meat Board and which will comprise of relevant industry organisations. The Consultant shall submit an initial draft report for scrutiny by the Meat Board, a final draft report for scrutiny by the Meat Board and industry stakeholders, and the Final Report for approval by the Meat Board board. 11. Consultancy Team Profile The consulting team with at least 15 year collective experience in the Namibian meat industry shall be composed of and contribute collectively and individually to the quality and standard of the report: • Accountant: With at least 5 year experience in analyzing value chains; and • Agricultural Economist / Economist: With at least 5 year of experience in agricultural economics with respect to a meat industry; or/and • Marketing expert with access to international value chain information of the applicable countries Foreign consultants are encouraged to include Namibian expertise or organisations whenever possible. 12. Schedule It is anticipated that the report will require three (3) months to conclude. The consultant needs to submit a schedule of submitting Reports allowing the Meat Board at least ten days for commenting. The Consultant must ensure that regular detailed planning is done with the Meat Board throughout the study. 8

13. Other Information Consultants responding to the TOR should submit technical and financial proposals. The technical proposal will describe the proposed overall study strategy and a detailed work plan of the specific phases and tasks to be undertaken, the study team members' responsibilities and curriculum vitae, the time schedule for carrying out the work, and the expected outputs. It will include evidence that the consultant, through past experience and training, is qualified to carry out the work and no alteration to composition of consulting team is allowed during the execution of the consultancy. The consultant shall include a detailed chart indicating all key elements of the study with their respective time durations, as well as personnel and financial implications.

W. Schutz Manager Operations

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