The Botswana Meat Commission (BMC) last week announced that it has revised prices and conditions for beef that qualifies to be exported to the European Union (EU), as a way of promoting beef supplies for export to the lucrative market. The new changes entail a five percent increase from the current EU price for Grade Prime to Grade 2 and a 10 percent rise for Grade 3.
The revised prices are deemed as an incentive that is meant to increase the EU throughput directly to the Lobatse abattoir. BMC anticipates that the rise in prices will encourage farmers to supply BMC with cattle that meet the inflexible standards of the EU market. However, the revised price structures are being implemented at a time when the BMC is reeling from a crippling cash flow problem that has rendered it unable to pay farmers.
BMC Chief Executive Officer (CEO), Dr. Akolang Tombale recently admitted to the media that the Commission did not have enough cash to meet its obligations, which as a result delayed its payments to farmers. He said at the time: “To finance our operations we use costly short term financing combined with sales whose proceeds come only five to six months later. This creates a serious cash flow shortage. This is the major reason why we delay in paying farmers.”
Just three months ago, BMC’s debt record showed that the Commission had a balance of close to P1 billion that was due to creditors, largely due to the short term financing instruments that the Commission was using to meet its operational obligations. It appeared that the strict export market conditions were working against BMC’s operating model. BMC has a chequered financial record history. The Public Accounts Committee (PAC) has previously questioned why government continues to put money into BMC despite its financially stretched state.
However Permanent Secretary in the Ministry of Finance and Development Planning, Solomon Sekwakwa responded by saying that instead of it being discarded it is important to determine how best BMC can be made to run better.