Tuesday May 7 2013

Butchery evolves into meat processor

A worker at one of the company’s production lines.

A worker at one of the company’s production lines. PHOTOs by Issac Kasamani. 



It all started as a simple butcher shop in Nsambya, a Kampala suburb in 1993. Twenty years later, it is one of the largest meat processing plants in Uganda. After graduating in Belgium, the then youthful Stephan Duyck used his savings to venture into a market that seemed to be ‘virgin’.

This would be the first butcher shop outside the traditional markets in the area. “There were no roadside butcheries in most parts of Kampala then and people could only buy meat from big markets like Nakasero.” “I saw an opportunity in this as a lot of orgnic raw materials (animals) was not being put to good use,” says the 43 year old, who also doubles as the company’s managing director.

What started as Quality Cuts selling unprocessed beef, chicken and pork to individual buyers has today grown into a large retail and wholesale brand in Uganda, mainly associated with middle and high income earners. “The butchery shop used to sell about three cows, one pig and 100 chickens per day. But currently we sell more than 100 cows, 56 pigs and 3,000 chicken per day,” Duyck says, referring to the volume of animals and birds processed on a daily basis.

As time went by, Quality Cuts started modern processing and packaging products in a way in order to appeal to customers’ tastes. The improvements prompted growth in local demand. The company started to record export orders as well.

In 2005, the company bought a sausage making plant in Seguku – Imperial Gourmet [now Fresh Cuts], which was later developed into the wholesale arm of Quality Cuts, mainly dealing with export orders. This tripled the firm’s production capacity for the various products including beef, mutton, goat meat, chicken and pork to an average at 22 tonnes per day.

Although Duyck is hesitant to go into the numbers game, Quality Cuts started with a $300,000 investment and is currently worth of about $3 million. Apart from selling its products locally, Fresh Cuts also exports to Sudan and the Democratic Republic of Congo where it was subcontracted to supply United Nations troops in the two countries, something which Duyck says has helped to improve its quality assurance standards.

Export destinations
Fresh Cuts also exports to Rwanda and plans to venture into Tanzania soon. The company’s achievements over the years have not been without challenges.Having started out with a weak management team with hardly any track record of success, Fresh cuts is currently among the Top 100 Mid-sized companies in Uganda.

Twice, the company has been recognised in Daily Monitor and KPMG Uganda’s Top 100 Mid-sized companies. The annual survey seeks to recognise Uganda’s fast growing medium sized companies that showcase business excellence as well as highlighting the country’s successful entrepreneurship stories.

Although it has not been an easy journey, Duyck says his story is filled with hard work and persistence.
Much as Fresh Cuts is the biggest formal player, its market share is affected by roadside butcheries that determine the market price. Duyck says: “We compete with roadside butcheries that don’t even pay taxes. There is need for standadisation in terms of prices, packaging and quality.”

Asked how he has managed to grow his initial $300,000 investment, Mr Duyck says: “When I started I was young but now my hair is disappearing (touching his receding hairline), and my face is getting wrinkled. “Growing this business takes a lot of hard work, commitment and focus,” he says before adding, “I am ambitious and I strive for success.”

Quality Cuts employs about 250 workers on a permanent basis with between 20 and 30 casual workers on a daily basis. “It makes me happy to make a contribution towards the growth and development of Uganda.” Fresh Cuts’ success story has also attracted international players such as Ireland Blyth Limited (IBL) which signed an agreement in July last year to co-own the processing plant in a 50:50 shareholding deal. According to Duyck the new shareholding structure has not only enhanced professionalism and production capacity but plans are underway to invest $2.5 million in a pork products processing plant.

The firm also recently signed a memorandum of understanding with the Uganda Meat Producers Union and Notura, a Norwegian Meat firm, to develop a $10 million abattoir and processing plant in Uganda.

The project construction is expected to start in the next six months. Although it’s not yet clear where exactly the project will be established, Duyck says it has to be near the source of raw materials. “The Entebbe Road plant will be kept as a hub where most products will be grouped and distributed. We don’t see the need of processing in Kampala yet we get most of our raw materials up-country,” he said.

Notura also initiated an awareness project two years ago that seeks to sensitise farmers on how to create disease-free zones, raise enough volumes and produce quality meat acceptable in the European Union market by 2016. Even with such tremendous growth Duyck says this has not come without challenges. “We are faced with supply shortages, a situation that has been further compounded by exportation of live animals to South Sudan.

“Exporting live animals to South Sudan distorts supply. We told President Museveni about it and he asked us to guarantee that there is enough internal processing capacity for him to ban the exportation of live animals. But this is a chicken and egg situation, It’s hard to invest in bigger capacity if I don’t have raw materials, it’s a tricky situation.”

Sudan threat
He says prior to exporting live animals to Sudan, 500 cows could be slaughtered in Kampala alone on a daily basis however; the number has now fallen to about 200. The Uganda Bureau of Statistics 2008 livestock census report shows Uganda has about 11.4 million heads of cattle, 12.5 million goats, 3.4 million sheep, 3.2 million pigs and 37.4 million birds.

The country produces 142,000 metric tonnes, with beef contributing 107,000, goat meat 28,000 metric tonnes and sheep 5,000 tonnes. The sector contributes about 17 per cent of Uganda’s GDP, although it could do better with a well structured market.

Secondly, the high cost of borrowing is also taking a toll on businesses and this, according to Duyck makes local dealers uncompetitive at the global scene. The high rates for shilling denominated loans which currently averages at about 20 per cent and the inadequate skilled labour market make the business unattractive on international markets.

Mr Duyck, however, believes that there is need for increased production, standardization and leveling the playing field for Uganda’s meat industry to realise its full potential.