Sunday, December 10, 2023

Citizen beef traders propose ending BMC and GPS monopoly

As the Minister of Agricultural Development and Food Security, Patrick Ralotsia, barnstorms through the country to solicit ideas on the liberalization of the beef sector, a group of citizen entrepreneurs have made a proposal that could threaten some entrenched commercial interests.

Through its “5-50 Liberalisation” model, the Botswana Meat Traders and Processors Association proposes the establishment of five service slaughter abattoirs at strategic points around the country to serve a niche market. For as long as it has existed and much to the consternation of some, the Botswana Meat Commission (which has abattoirs in Lobatse, Francistown and Maun) has focused primarily on the European Union market. In terms of what the Association proposes, these abattoirs will slaughter 50 animals a day for non-EU export. Forty percent of slaughter capacity will be dedicated to the community and will BMC will continue to serve the EU market.

A regulatory body to be set up will assist in establishing the same standards across all five abattoirs and in the Association’s judgement, having only five abattoirs means that the regulatory body will not be overloaded. The Association hopes that the niche market will mitigate risk against the strict EU market which, as in the case of Kenya, banned meat products that didn’t meet its food safety requirements.

The 5-50 model will end the monopoly that obtains under the current value chain in which BMC buys prime and grade cattle from feedlotters and farmers. The Commission has monopoly on the slaughtering and deboning of cattle whose beef is then exported. In a development that has now become hugely problematic, BMC shed its capacity for marketing its beef to a United Kingdom company called GPS Food Group.

Based in an Essex town called Loughton, GPS now acts as BMC’s distributor in export markets. The company, which has a similar contract with MeatCo of Namibia, provides global procurement, supply chain management, logistics, and marketing services for meat protein products. As a beef value chain analysis action plan that was developed under the framework of the Private Sector Development Programme (PSDP) states, shedding this capacity was not a stroke of genius because it left the Commission with no in-house expertise in market intelligence.

BMC proposes to reconfigure the current value chain by selling 49 percent of its shareholding in Lobatse to a private company, leasing all of Francistown to a private company and retaining full control of Maun. On the other hand, its business relationship with GPS remains unchanged. The Association’s assessment is that this model doesn’t solve the monopoly problem because it merely replaces state monopoly with private monopoly. In terms of its own proposal, the players in the value chain will have several ownership arrangements which include public private partnerships as well as slaughter space allocation. The 5-50 model doesn’t alter the shareholding model but adds to it with the five abattoirs that slaughter 50 cattle daily. As regards the marketing, instead of one company (GPS) selling the Botswana beef, this model proposes more marketing companies that will serve the five niche market abattoirs.

The PSDP report on the beef value chain says that BMC’s business relationship with GPS means that the former does not have access to meaningful independent export market intelligence.

“The overreliance on GPS is restricting BMC to directly access market data. All information related to market trends and specific consumer requirements are channeled via GPS,” says the report adding that after the scaling down of “the inefficient and costly UK branch, BMC Sales and Marketing department has been left understaffed, lacking the necessary skills to open new markets and/or develop new products.”

The Association says if its 5-50 model, it would develop local capacity – which would include access to meaningful independent export market intelligence.

The Association’s proposal is one of the many that have been submitted to the ministry. In addition to it, there will be another from a KPMG consultancy that is still being finalised.


Read this week's paper