The cash strapped Botswana Meat Commission (BMC) Chief Executive Officer, David Falepau, has been forced to resign only weeks after Cabinet fired a number of board members.
A few weeks ago, there was a standoff between Falepau and the Board. Some Board Members wanted the Chief Executive sacked, but Cabinet backed him on account of the reforms he has brought to the beef industry since he arrived a little less than two years ago. Instead, Cabinet opted to get rid of some Board members and approved P104 million as a top up loan in an attempt to stabilize the beef industry.
Information passed to the Sunday Standard indicates that BMC was no longer able to meet its financial obligations with cheques written to cattle suppliers being dishonoured.
That the cash strapped BMC quickly gobbled up the P104 million bail out and went back to government for another cash injection of P250 million. Unconfirmed reports state that Cabinet insisted on the sacking of Falepau as a precondition to approving the additional loan of P250 million.
Sources close to the BMC say the P250 million bail out will not help the commission, which is currently saddled with expenses running into tens of millions arising from keeping cattle in feed lots while it is not making any sales because of the EU ban.
Sunday Standard investigations have also turned up information that BMC has been losing money to a practice called “rendering”, through which whole consignments of healthy animals are condemned.
Early this year, the Department of Livestock Procurement introduced a system through which whole consignments of healthy animals were condemned and sent to the rendering plant because their actual number exceeded that written on the removal permit – in some cases with just one animal.
Although this practice has been discontinued, this rendering method is said to have been very costly. One example given is what happened on February 20 when 42 healthy animals were condemned and sent to the rendering plant.
In some instances, when supervision has been lax, cattle have been slaughtered before veterinarians from the Department of Veterinary Services in the Ministry of Agriculture could conduct what is technically called an ‘ante-mortem’ inspection (opposite of ‘post-mortem’ inspection) on them.
In an earlier interview, the BMC Corporate Communications Manager, Tiro Kganela, said the Commission’s recent difficulties are a result of a number of factors that have conspired to undermine the trading conditions.
Kganela said the outbreak of Foot and Mouth last year was one of the factors.
He said there was a closure of feedlots resulting in BMC slaughtering only 91 000, a big shortfall from the 200 000 that had been projected.
As if that was not enough, BMC was delisted from the lucrative European Union Market.
He said despite these disruptions on the BMC supply chain, the Commission continued to honour the export parity price code under which BMC pays prices pegged to the South African market. This is over and above the fact the cattle prices increased by 19 percent in real terms.
There was also an unpaid overdue debt of P20 million from creditors in Zimbabwe.
Kganela said these factors conspired to make the BMC financial situation untenable.
At the end of 2011, Botswana started the slaughter of cattle about two weeks late as a result of maintenance work that had to be done.
The issue of access to the European Union market had also not been resolved, adding to the already uncertain and difficult trading environment.
Sunday Standard can confirm that attempts by BMC management to delink BMC prices from those of South Africa were rejected by the board as were attempts to reduce cattle prices.