Wednesday, April 21, 2021

BMC warns of possible huge deficit, but has no plans to ditch EU

The Botswana Meat Commission said on Friday it has no plans to ditch the European Union as it remains its critical market, but warned that when exports resume before the end of the year volumes will be reduced.

The EU consumes large quantities of the country’s beef, but non compliance issues forced the de-listing of the meat products from the country to the world’s largest market.

The Chief Executive Officer of the Lobatse-based outfit, David Falepau, said they continue to look at alternative markets for their product, but added the EU remains an important partner to Botswana.

“I will never suggest EU is not an important market to us. It offers us assistance and we will never consider not supplying the EU,” stated Falepau, who replaced Dr Motshudi Raborokgwe three months ago.

Last year, BMC exported 12, 000 tonnes of beef products to Europe and will not be servicing that market until compliance issues have been resolved.

Other products were sold to consumers in South Africa, but the plan for the corporation is to diversify customers in a bid to mitigate the risk.

Falepau inherited the BMC at a time when it faces a plaque as its source of supplies was hit by Foot and Mouth Disease (FMD).

When he came in, Zambia, from which the BMC got its supplies, was hit by FMD and when they went to Zimbabwe, the disease hit and the same with South Africa. However, the line of supply from SA is normalising as traces of the disease were not widespread as previously feared.

The biggest challenge for the government underpinned parastatal is to meet the standard requirements of the European market, which include satisfying the biggest concern of the traceability of meat products.

Falepau revealed the Department of Veterinary Services in the country has put an action plan to the EU that will help in accreditation of key players in the beef sector.

The EU concerns will be rectified in 3 stages; the first one being to accredit feedlots, and then accredit fenced farms and the contentious issue of finding an accreditation system for communal farms.

BMC currently manages the traceability of the products from its centres and when the livestock is still alive is the responsibility of the Department of Veterinary Services.

But the EU has discovered that there were a number of deficiencies.

“The department is quite optimistic. We could be supplying the EU by the last quarter of this financial year,” added Falepau.

If the ‘abnormalities’ are not rectified, BMC revenues will be hit and large deficit expected.

Falepau revealed they are trying to identify what potential loss is, but ‘could predict a deficit’ of between P150 million to P200 million by the end of the year.

“That is the worst case scenario.”

The parastatal is currently exploring other markets in the region and abroad as it moves to mitigate the risks associated in relying in one single market as the EU is currently susceptible to currency fluctuations vs. the Pula.

Falepau admitted that when he took over as CEO, he was surprised that BMC was reliant on one dominant market and advised that the country needs to have a number of export markets.

“It (single market) exposes us currency volatility. Pula was rising in value while the sterling was devaluing”.

The new CEO revealed a lot of people are asking him questions on whether the BMC will close, but said ‘actually that is the opposite’ adding that the plan now is to drive the cattle throughput on the abattoirs and then the market.

Its abattoirs are still slaughtering and there are currently no plans to slash the workforce to conserve cash.

The new possible markets that the corporation is negotiating to export to include Iran, China and Russia. But the success will depend on whether these have diplomatic ties with Botswana or established animal protocols.

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