Tuesday, August 11, 2020

BMC warned of possible EU ban

BY KHONANI ONTEBETSE & REUBEN PITSE

The battle for the control of Botswana Meat Commission (BMC) has entered choppy waters and may cost the country’s beef producers millions of Pulas and the European Union market ÔÇô it has emerged.

The BMC has decided not to renew its contract with its United Kingdom-based marketing company GPS and will not extend a transition period for a smooth hand over as suggested by the Ministry of Agriculture.

GPS this week raised red flags on the potential crisis that may arise from the abrupt termination of their contract.

BMC’s legal counsel Lulamane Letshola informed GPS Managing Director Brian Perkins in a letter dated September 24 2018 that, “BMC’s sales and marketing manager will engage with yourselves on the handover process.”

Letshola stated that “Please be advised that the sales and marketing agreement between ourselves commencing 1st January 2016 for a period of three years shall terminate naturally on the 31st December 2018 in accordance with clause 9.1 of the contract.”

Perkins approached Minister of Agricultural Development and Food Security Patrick Ralotsia warning of “…substantive and the potential consequences catastrophic to The BMC and the farmers.”

In a letter dated 26 November, Perkins reminded the minister that the BMC has recently lost both its Chief Executive Officer and Chief Financial Officer within weeks of each other.

“This, in any organisation, would present a crisis situation where the two most knowledgeable and commercially experienced officers leave in quick succession.  There would, in all likelihood, be a lack in depth of understanding of the real challenges the business faces within the lower tier management,” he said.

According to Perkins, “This would generally reflect in a run on confidence from key stakeholders and financial institutions. The action of management over the past few weeks reflects a complete lack of understanding of the business as demonstrated by its actions during this period.”

Perkins said GPS recently received a letter by email giving 8 weeks’ notice that the GPS Sales & Marketing Contract would be terminated as at the 31st December 2018.

“This was without the courtesy of any prior consultation, discussion or consideration of any transition plan. Whilst this was a disappointment to GPS we highlighted that this was not only highly unprofessional but puts The BMC at serious risk from a number of perspectives notably cash-flow and customer and market confidence,” he said.

Perkins said “We immediately pointed out that a transition period of less than six months would be detrimental to the interests of The BMC and the farmers.”

 He added that “one of the immediate consequences of this has been the Norway Quota Auction being sabotaged by speculators who have seized on the opportunity of uncertainty concerning BMC operations. This has already cost Botswana and Namibia economies Ôé¼1,000,000 (15,000,000 PULA) collectively.”

He said the Acting Chief Executive Officer Dr Boitumelo Mogome-Maseko seems “completely resistant to the need for stability during a transition highlighting the inexperience and naivety of the management team and the Board in not understanding the depth and breadth of work covered under the marketing agreement.”

He said GPS contacted the Acting CEO late on Thursday 22nd last having been informed that the Ministry had directed that the BMC should work on a 6 month extension to the BMC/GPS contract.

“I informed the Acting CEO that we had expected to hear from the BMC on an extension of 6 months and I was informed that A/CEO did not take direction from MoA or take note of the farmers,” said Perkins.

He said Mogome-Maseko informed him that she only negotiated and took instructions from the BMC Board and Chairman Dr Thapelo Matsheka.

“I was frankly shocked to hear these statements given the complete disregard shown for the owner of the BMC, Ministry and the key stakeholders, the Farmers,” he said.

Perkins said Mogome-Maseko has however continued to insist on a further visit to the EU having already visited the UK only 2 weeks ago.

“I have explained in detail that visits during the busy Christmas trading period are difficult to arrange and customers have specifically asked if visits could be made in January or February after the busy Christmas period,” he said.

He said that “The Acting CEO wrote to me last Thursday and stated that the EU visits ‘must happen, without fail’ and something that should be a very, very low priority appears to be of paramount importance for the Acting CEO and Chairman?”

He added that the obvious lack of focus on a transition plan, a recovery plan for the lost P15 million from the Norwegian Quota and the sales revenue and income plan going forward is a concern.

“In addition there is no plan regarding how The BMC will pay the BWP90m currently owed to farmers and how cash-flows will be managed over the Christmas period and into the New Year,”  Perkins said.

He said “This simply makes no sense and is deeply worrying given that GPS has specifically been instructed not to sell any Botswana beef beyond 1st January 2019.”

Perkins explained further example of the real risks and why the sales and marketing contract needs to remain for a safe transition period and managed by a professional, world class business with global sight is clearly highlighted by Central Meats, a customer developed directly by BMC sales in Lobatse.

He said one of the companies (names withheld) contacted GPS on a general mail earlier this month stating that they were an approved BMC agent authorised to sell in the EU as well as RSA.

He said “Their paperwork and introductions carried the BMC logo. The company offered Bone In BMC Beef for Europe as well as Offal ÔÇô These products are banned by the EU and, if shipped would be seized by the BIP and the contents destroyed.”

According to Perkins, “The EU would likely react by banning all BMC containers and putting Botswana on suspension until the issue had been thoroughly investigated (Please note ÔÇô One of the last FMD outbreaks in the UK was caused by smuggled Chinese Pork which ended up costing the British Government Billions to control, the EU has zero tolerance for taking risks with threats from TBD’s).”

He said there seems to be little, if any, recognition of the serious danger the BMC sales teams are putting both Botswana and the BMC in and the real risk of customers, such as the new agent of BMC, sending prohibited product to the EU and potentially bringing about a complete EU ban for Botswana exports.

He said the new agent “obviously do not know what they are doing and are, in our opinion, a dangerous customer to have as an agent.” He said the agent operate from South Africa a region currently contracted to GPS but in which BMC sales teams operate outside of the agreed contract.

Perkins said BMC is in crisis and needs proper direction and control over the coming period as the Commission moves towards privatisation.

He said GPS, over the 6 years have worked with the BMC have helped to raise cattle prices by 40% and the cash realised for the BMC by 100% and, GPS have a deep understanding of BMC and Botswana agriculture.

“We believe in the Botswana beef sector and we are prepared to assist in the transformation period and, if invited, to become an investor in the transformed BMC. GPS will participate in the tender process underway currently and do not ask for special treatment. We are, however, extremely concerned that the tender process will be rushed, not properly evaluated and a contract potentially awarded by an inexperienced management team given the actions over recent weeks,” said Perkins.

Contacted for a comment B Botswana National Beef Producers Union (BNPU) Chairperson Madongo Direng said he was not in position to discuss contractual issues as they were waiting for feedback from Ralotsia and the Permanent Secretary in the Ministry of Agriculture Jimmy Opelo.

“We hope that before Christmas they should give us positive feedback. Whoever gets the new contract must be as transparent and competitive as possible and offer a better producer slaughter price, so that we can have more money in the pockets of farmers,” he said. 

Ralotsia and Opelo’s mobile phones rang unanswered while BMC had not responded at the time of going to press despite a promise to do so.

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