Friday, June 21, 2024

BMC responsible for near collapse of beef industry

Government’s failure to provide an oversight role to the Botswana Meat Commission (BMC) and the Commission’s monopoly on cattle and beef export nearly collapsed the industry, a report by audit firm KPMG has revealed.

The report also found that compliance cost to the stringent European Union (EU) accreditation standards is a threat to the survival of the beef and cattle industry.

According to the report, one of the threats indentified in analyzing the cattle and beef industry relates to “increasing EU standards and requirements relating to beef imports leading to compliance costs.”

It added that another threat to Botswana cattle rearing high transport costs from Botswana to EU and other high-value markets.

 “Given the high compliance cost to the stringent EU accreditation standards, it is important for Botswana to consider either increasing export to the EU (with the sunk cost of compliance already expended or to expand export geographies (and reduce the average cost of compliance across total exports),” the report said.

 However, these decisions will hinge on future policy decisions, the report noted. “For example, decisions about whether to liberalize the cattle beef market or not will determine the potential effect on supply, competition and efficiency,” the report stated.

While the report also stated that since there are currently no volume restrictions to EU countries hence this is a lucrative market to exploit further considering the high prices paid by the EU for beef products, this comes at a cost.

“There are, however, challenges linked to the trade arrangement between Botswana and EU. One of these is that the EU forces Botswana to test cattle, at an optionally high cost, for mad cow diseases, although the country has never had any such outbreak. Additionally, standards on animal welfare, transport, cleanliness and labour increases each year,” the report said. 

It added that “Botswana has not managed to fill the beef export quotas set by the EU, due to insufficient supply of high quality beef. This was due to a variety of factors, including the poor quality of some cattle reaching the BMC making them ineligible for the EU market,” the report said. 

The report said that BMC monopoly stifles potential investment into the cattle and beef industry, historical, current and future meat production (quantity) and quantity exported.

It noted that by maintaining a monopoly, the benefits of competition (in driving efficiency and innovation) are lost.

“Furthermore, export beef is less important in the cattle sector, with an estimated 50% of off-take serving the domestic market. Offtake rates have shown no trend increase, indicating little or no productivity increase in herd management and the gap between offtake rates between communal farmers and commercial farmers remains,” it said.

The KPMG report said that the low productivity and subsequent off-take rates have many contributing factors such inconsistency policy objectives (by government) present further impediments to the development and expansion of the industry.

“Here we specifically refer to the dual mandate of the BMC to develop the industry while also pursuing commercial interests. Although Botswana has achieved-and generally maintained-EU accreditation, it does seem that the industry would benefit from improved, more reliable veterinary standards and accreditation to ensure compliance all times,” the report further stated.

The report said farmers have pointed to the Department of Veterinary Services (DVS), who seems to be lacking resources in equipment and workforce.

“Indeed he DVS is tasked with the responsibility to oversee vaccination programmes, health inspections at meat processing facilities, disease outbreak management and LITS which seems to be overwhelming its resources,” the report said.


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