Friday, June 5, 2020

BMC on the verge of collapse

The Botswana Meat Commission has gone down on its knees begging farmers across the country to bring their cattle for slaughter so that they can meet their international export commitments and maintain the BMC as a going concern.

The BMC, at its Lobatse abattoir, has a capacity to slaughter 144,000 cattle per year or 12,000 per month.  Currently, BMC is running at 15% of capacity, slaughtering less than 2000 cattle per month. 

Cattle farmers and feedlotters (those who fatten cattle intensively over a 3-month period prior to slaughter) have estimated that in January and February 2020 there will be less than 1,000 cattle entering the BMC abattoir for slaughter.   This trickle of supply threatens BMC with potential closure as it is insufficient to sustain the business.

Already, BMC is on the verge of failing to meet its contractual obligations to important off-take customers such as the lucrative 1,600-ton Norwegian quota to whom they are required to supply an agreed quantity of chilled and frozen product at agreed prices.

In January President Mokgweetsi Masisi formed the Presidential Beef Committee with the  purpose of investigating the current malaise affecting the Botswana Beef Sector.Over the following months a team including Government Departments and Industry experts investigated the reasons and the extent of the issues creating the current problems.

“A detailed action plan was submitted to the Minister of Agriculture in April 2019 by a BMC-Producer Advisory Committee which set out a full-assessment of the malaise affecting the industry and identified the issues which needed to be addressed to drive the survival and rejuvenation of the beef sector and the BMC,” said industry insider.Sunday Standard has seen this document which appears to have been ignored.

Things came to a head when on the 19th November lawyers representing 13 feedlotters sent a demand letter to BMC claiming payment of an amount in excess of P130 million which BMC has owed them over an extended period, some up to 5 months.  This demand was in respect of cattle delivered to BMC and already slaughtered by them. But BMC ignored the demands and High Court summonses were served on them this week. 

Sunday Standard understands that feedlotters supply approximately 70% of cattle to the BMC for slaughter and are a substantial stakeholder in the industry. “If they are not paid by BMC then the supply of cattle will cease and this is what has happened,” said the same source.

One feedlotter, who wished to remain anonymous for fear of being singled out, explained that the feeding cycle from buying a weaner through to fattening for slaughter is about 3 months and that the cost of that cycle to the feeder is enormous.“It includes the cost of the weaner, the cost of feeding, labour, vaccines, transport, insurances, and so on.  Leaving aside any profit that may ultimately result from slaughter it is impossible to maintain the production cycle if BMC does not pay at the end of the cycle. Without BMC’s payment, there is no money to buy-in weaner-stock and keep the cycle rolling over.,” he said.

He continued that for BMC to ask feedlotters to continue providing cattle for slaughter while it refuses to pay for cattle already slaughtered, “is to ask feedlotters and farmers to subsidise the BMC simply because BMC refuses to pay what it owes. The feedlotters and farmers are not in business to subsidise BMC,” he said.

“BMC has a decision to make; it must pay the farmers and feedlotters what they are owed for past purchases so that, despite disruption in the feeding cycle and off-take agreements, the business continues in the national interest.   If BMC does not pay it must face the consequences of its assets being attached at the hands of those who have now sued for recovery of what is owed to them,” he concluded.

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