At exactly 4:45pm on August 28, I and a group of other journalists walked into Uganda’s largest meat processing plant – the Fresh Cuts Limited factory at Seguku, a Kampala suburb, about 12 km along Entebbe Road.
Unfortunately we didn’t get to witness the fascinating process by which beef is turned into tasty, soft sausages, as we had hoped. We found workers done for the day, machines shut down, cleaning crews scrubbing up equipment and floors until they sparkled.
Under normal circumstances the factory would have been busy from day-break until 8:00 pm. But things are far from normal in the meat processing industry.
The company has cut back production by 70%, thanks to a drop in sausage sales sparked by recent reports of substandard, unbranded products on the market that have scared consumers. Gruesome images of unidentified men producing the meat products in highly unsanitary conditions, published in print and electronic media about a month ago, have scared meat eaters away from the tasty snacks. The sausages were reportedly made from offals and meat and sold mostly on the popular roadside grills to unsuspecting customers, who wouldn’t easily tell the difference with genuine ones.
Fresh Cuts Managing Director Stephan Duyck, who led the tour of the factory, said the company’s sales had dropped by up to 70%, forcing them to cut down production.
Duyck said sales had drastically declined and were down to a measly 30%.
“We used to do 3,000 kilogrammes per day but in just two weeks sales have gone down to 1,000 kilogrammes,” he said.
Duyck warned that while the company could survive at 30% sales, if substandard products were not speedily eliminated, those who earn a living from Fresh Cuts would suffer.
Fresh Cuts employs 250 people directly, and 600 indirectly as agents and sausage grillers, earning between Shs 300,000 and Shs 400, 000 a month.
While Duyck did not say if the company had laid off any employees yet, he said many agents were already out of business as negative public perception regarding sausages had driven away customers.
A roadside sausage griller in Kasubi, a Kampala suburb, said his sales have drastically fallen. “I used to sell over six kilogrammes a day but today I sell one or less,” he said.
Duyck said the fall-out was beginning to affect sales of its other products, including frozen and boxed meat, minced meat, sausages, hot dogs, sliced ham and chicken cuts.
Attempts to establish the effect on the other sausage maker in Uganda, Sausage King Uganda Ltd were unsuccessful as the managers were unavailable. Other known sausage makers in Uganda include SK Sausage King and Your Choice Ltd.
However for Fresh Cuts, the issue has strained business relationships.
Mauritius conglomerate Ireland Blythe Limited (IBL) Group, which recently bought a majority stake in Fresh Cuts, is reported to have raised concern about what how the development would affect its investment.
Duyck would not disclose the extent of IBL’s investment, but said ithad already provided human resource support and opened the door for Fresh Cuts to a significant export market – the 25 supermarkets it owns in Mauritius.
It is unclear what Fresh Cuts done to reassure its major investor, but the company has engaged an intensive campaign to reassure local customers, especially bigger retail chains that stock its sausages.
Shoprite, one of the major stockers of Fresh Cuts products, had threatened to remove all sausages from its coolers following the media reports, until the company reassured the supermarket that its products were safe.
“We have hosted them [Shoprite staff] here and explained all our processes to them, they toured the factory and left convinced that our products are different from others on the market and they have no problem,” Duyck said.
The company has used the crisis to deploy a broader public relations campaign, engaging stockists, grillers, hotels, restaurants, etc, about the existence of sub-standard sausages and showing them how to distinguish them from genuine ones.
Duyck said they had issued all their grillers with certificates and identification like t-shirts, caps, etc, and were regularly monitoring them to make sure they did not mix the company’s products with substandard ones.
Fresh Cuts is also partnering with Kampala Capital City Authority to identify the culprits responsible for the sub-standard products, to close their businesses before they inflict further hurt on the industry.
“But we want to partner with local butcheries to boost their standards and we encourage them to approach us any time,” Duyck said.
Duyck said Fresh Cuts had invested in proper facilities and attained ISO 22000 and the Uganda National Bureau of Standards (UNBS) certification for its production processes, because quality is at the core of its brand.
However, the industry has other producers with poorer standards, some of whose sausages contain bacteria like salmonella and E.coli, which cause diarrhea, vomiting, typhoid and other complications. A recent analysis by Chemiphar Laboratories reportedly confirmed the impurities in the products of two sausage processing companies.
“These are the problem,” he said, without naming the companies.
The issue highlights the sensitivity of the fledgling meat processing industry and the need to strengthen its regulation, to encourage investment.
A bigger problem
Unfortunately, responsible government departments like UNBS have shown little interest, because sausages account for very small component of the beef sector and the recent crisis has had no visible impact on the broader meat market.
“Sausages make only about 10% of Uganda’s beef sector so those problems have had no effect on general animal sales,” said Dr David Kamukama, vice chairperson of the Uganda Beef Producers Association. “People are eating meat. In fact our prices are just going up.”
Komukama said 90% of meat in Uganda is sold unprocessed, and sausages were just a by-product, made from the off-cuts left after packaging high-end quality cuts.
However, the lack of standards for meat handling and sanitation, and lack of enforcement of the few existing regulations, has been dogged the beef industry for decades, scaring many potential investors, which may account for the minimal processing capacity and even more limited exports. The major regulation guiding the beef sector remains the Public Health Act 1969, and UNBS has reportedly not set specific standards to guide manufacturing processes.
“It is laxity on the part of government,” Komukama said. “Even if we put up standards, there is no mechanism to enforce them.”
Komukama said the industry requires an investment between US$ 5 million – US$ 10 million to set up a medium-sized abattoir, through a public-private partnership, to mainstream the handling of meat.
“I don’t know how many times we have discussed this with government over the last 10 to 15 years, but they just talk and take no action,” he said.
“The private sector cannot do it alone because of the nature of public goods involved, like hygiene and quality standards, drainage systems, power, and others,” Komukama said. “How can the private sector invest in an abattoir when there is no market regulation, no standards enforcement, with consumers are running away?”
Two years ago, Fresh Cuts re-invested in its operations, increasing processing capacity by 200%, from 7 tonnes to 15 tonnes a day. The company currently processes over 100 tonnes of locally produced meat every week [including beef, pork, mutton, chicken and goat meat.
Duyck said in total Fresh Cuts has invested over US$2.5million (Shs 6 billion) since 2005 and the recent partnership with IBL would enable further growth.
The company is developing partnerships with selected farms, supporting them to improve production and has employed a veterinary doctor to offer extension services. In addition, partner farmers are assured of a market for their animals at premium prices due to the assurance of quality they provide. “We have over 200 chicken farmers supply us with birds,” Duyck said.
He said a good percentage of the company’s turnover came from exports to Congo, Sudan, Tanzania and other countries, which amount to about 40 tonnes of processed meat a week and would increase significantly with improved regulation.
Of Uganda’s 7.3 million head of cattle, accounting for only about 5% of GDP, largely due to the lack of standardization and investment.
On a recent tour of the factory, Uganda Manufacturers Association Executive Director Sebagala Kigozi advised Fresh Cuts to gazette its agents and avoid mixing up their sausages with poor quality products.
The logistics may be complex, but may help safeguard the brand profile quality has curved for the company in the market. Duyck says it is the quality of their meat products that has enabled the company to win tenders for export in the region.
In May 2008, these export orders represented 50 tonnes per month, about US$4.5million (about Shs 10 billion) per year in earnings.
The stakes are high for Fresh Cuts, which explains the leadership role it has taken to attempt to rid the market of sub-standard sausages.