Tuesday, January 19, 2021

De Graaff rejects GRM profit strategy

The Minister of Agriculture, Christiann de Graaff, has rejected the recommendation of BMC’s technical partner, GRM, to change the BMC from a non-profit cooperative type organization, which is required by the BMC Act to maximize returns to producers, into a profit driven conglomerate.

This is a victory to local cattle producers who saw this as a plan to help the BMC to abuse its dominant market position to take control of the cattle production sub-sector at the expense of the BMC’s 70,000 small scale communal farmers suppliers.

The full implications of GRM’s recommendations became apparent to Minister de Graaff when he was presented with a draft Cabinet Memo prepared by senior BMC management and Ministry officials which sought to amend the BMC Act.

It emerged that the new Act would, among other things, strip the Minister of his statutory BMC oversight authority. Cattle producers feared that this would give BMC management the unfettered discretion to intentionally underpay producers in order to make super profits of P650 million from 2009 to 2011 and to invest such super profits in business ventures, which encroach on the private activities of its own producer suppliers, including cattle buying, farming and feedlotting.

“As the Botswana Cattle Producers Association (BCPA) has never been consulted by the BMC or the Ministry of Agriculture on either GRM’s strategy for the BMC or on the corresponding proposed amendments to the BMC Act, I am not in a position to comment,” stated Mr. Philip Fischer, Founder and Chairman of the BCPA. Since 2005 when the BCPA was founded, Fischer has led an intensive BCPA public policy advocacy campaign, which has succeeded in tripling both BMC prices and the value of cattle making the BCPA the champion of the small scale communal cattle producer.

The BCPA’s success led President Lt Gen Ian Khama to publicly commend Fischer “for being brave enough to push the government to improve the agricultural sector”.
“The success of BCPA, which includes the increase of BMC prices and the number of feedlots in the country, was due to Mr Fischer’s hard work,” stated the President.

“Just as producers owe a debt of gratitude to HE when he saved a dying cattle industry by intervening in December 2005 to increase BMC producer prices by 40%, it would appear that the Minister is to be commended for taking decisive action to protect the interests of cattle producers,” Fisher told Sunday Standard.

On the role of the BMC going forward, Fischer stated, “The BMC is a national treasure because it’s our gateway into the EU, the most lucrative beef market on the planet. When we sign the Economic Partnership Agreement (EPA) with the European Union (EU) at the end of May, Botswana will have the right to market as much beef as it can produce in the EU market on a duty free, quota free basis forever, which is simply the best free trade deal in the world. Though cattle producers in developed beef exporting countries like the US, Australia and Brazil have a supply side advantage over Botswana in terms of their superior production efficiency, their primary demand side constraint is the lack of preferential EU market access due to tariff and non-tariff barriers to trade. Botswana’s situation is the opposite. We now enjoy unlimited EU market access for our beef but our supply side constraint is that we are currently only producing at 50% of our potential capacity.”

“Now that the Minister of Trade & Industry has secured our access to the EU market under the EPA,” stated Fischer, “our focus must be on increasing beef prices to the point where all producers are motivated to commercialize by converting from oxen to weaner and feedlot production which is the future of our cattle production industry for two reasons. Firstly, weaner and feedlot production is the only system that can deliver the type of product that the EU market demands, which is the year-round supply of consistent quality high grade beef from young, well finished animals. Secondly, weaner and Feedlot production is also the only production system that can double off-take and BMC capacity utilization which is required to minimize BMC overhead costs and maximize producer prices on a sustainable basis.”

“The BCPA is hopeful that the Ministry of Agriculture will honour its request for full prior consultation on both GRM’s BMC Strategy and the corresponding proposed amendments to the BMC Act to ensure that they serve the best interests of Botswana cattle producers. Most important in this regard is the long awaited removal of the BMC export monopoly and the urgent appointment of the BCPA Chairman to the BMC Board to ensure that Botswana’s cattle producers are given a voice at the BMC.”

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