Country Profiles

The processing sector

Like the retail sector (markets), the slaughter sector is dominated by rudimentary, low-cost structures (slaughtermen) but is also comprised of traditional structures (ceremonies) and more “modern” structures (a refurbished abattoir). Also like the retail sector, the GoTL is seeking to move the relative importance of these structures toward more modern structures through regulation, inspection and centralisation of structures. Implementation will also be difficult, and could be expected to increase costs and prices.

Slaughtermen kill the vast majority of cattle in TL and have several structural features. They operate in rudimentary, individual facilities, different to Indonesia, where (legal) butchers (jagal) operate in certified service slaughter facilities (public – city and suburban). Second, like “jagal” in Indonesia, slaughtermen operate integrated operations – upstream (so are also cattle traders) and downstream (so can be beef wholesalers and retailers). Because slaughtermen take ownership of cattle and beef, they are powerful actors in the industry. This provides opportunities to develop agribusiness especially though links between slaughtermen and producers. At the same time, however, the slaughtermen are relatively small and speculative. Unlike abattoirs in some countries (like China) that take ownership of product, they don’t enter into long-term contracts or provide inputs and services to secure supply.

Varela (2014) conducted a study of 35 slaughtermen across TL, which represents most of the slaughtermen in the country. 60% of the slaughterhouses kill one head per day, most slaughter daily overnight or in the morning. Half buy directly from farmers, and the other half both from farmers and traders. Most of the slaughter areas did not have walls, and 40% no rooves (open air). Worker numbers ranged from 2 to 13 people, with the biggest category employing four people, with most wages of $5 / day. Cattle killed were very light (40kg to 100 kgcarcass weight. All of the slaughtermen sell beef to markets and consumers, with 74% to restaurants as well.

Because of low hygiene and food safety standards of the slaughtermen, the State has sought to regulate the slaughter sector through the development of a new regulation titled the “Slaughterhouse Permit Regime”, introduced to complement stricter meat marketing regulations (see below). The regulations aim to force slaughtering in Dili into a centralised abattoir (Tibar) refurbished through funding from government and donors and opened in 20126. The abattoir consists of a large slaughter area with basic but appropriate slaughter facilities, including a race, killing box and unmechanised slaughter line. There are no cold storage facilities but these, together with improved water facilities will be installed (by government).

The model is that the company with the operating licence of the plant (Ebai) will provide slaughtering services for the large number of slaughtermen for a fee ($30 per head). The operator then pays passes on a proportion of this ($7.50) to government as part payment for government costs, including the plant, water, power costs and inspection costs. The plant has a capacity of perhaps 50 head per day and can operate Monday to Saturday. However, at present (2015) the plant kills 45-53 head per month, an average of 4 days a week, and 2-4 head per day. All of these cattle are for the two “modern butchers” (see section 9 below), one of which is owned by the company with the operating licence for the abattoir, and the other by a relative.

Like the meat marketing regulations, slaughter regulations will be difficult to apply because of resistance from small butchers, and the employment and possibly price effects. The abattoir is also located about 10 kms from Dili wet markets, so pose some cold storage and transport logistic difficulties and costs. The regulations and rollout of the more “modern” slaughter system is planned in four districts too (with priority in Maliana and Bacau) but these plans have been delayed, given the challenges even in Dili.

This policy approach could eventuate in several ways. One is that private butcher shops increase in number and volume, all slaughter is channelled through the centralised plant, and the abattoir becomes viable. In this case, there may be opportunity for the development of higher value beef markets and import replacement in the longer term. The other eventuality is that regulatory measures to centralise downstream sectors are not implemented, the plant is used only for a small market in “modern butcher shops” and that the state are forced to subsidise the slaughter facilities indefinitely. Or there may be other permutations, or continuation of systems operating side-by-side in segmented chains.

6 The Tibar abattoir facility is located in Tibar suco (Liquica district), about 10 kilometers west of Dili. The facility was one of about 10 plants built by JICA (Japanese aid agency) in Indonesia in 1996/7.

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