Thursday, June 4, 2020

Gov’t rejects bailout for troubled BMC

The government has no intention to bail out Botswana Meat Commission (BMC), according to the Agriculture ministry. Instead, it will probe the state owned meat exporter for possible misuse of funds in the past. 

BMC, which has been on the reds for several years now owes farmers across the country over P160 million and is reportedly in desperate need for cash bailout.  Apart from bailout request from government, the commission has gone down on its knees begging farmers across the country to bring their cattle for slaughter so that they can meet their international export commitments and maintain as a going concern.

Agriculture junior Minister – Beauty Manake told legislatures during a Parliament sitting this week past week that the government has no funds to immediately bailout BMC. 

Instead, Manake said, efforts are on-going to outsource services of a company to conduct a forensic audit on BMC. The findings of the audit are expected to provide clarity on what led to BMC going into debt. 

 Manake also told Parliament that instead of bailing out BMC with cash, the commission has been asked to engage local commercial banks to generate a short-term bank facility or overdraft to address both immediate and future working capital requirements. 

Figures availed to Parliament this week shows that as at the beginning of December 2019, atleast 364 farmers – individual suppliers and trading companies were under the BMC’s creditors list. Of the 364, 241 supplied BMC Maun abattoir, whilst 123 supplied BMC Lobatse abattoir. In total, the commission owed P167.2 million to the 364 farmers as well as feedlotters.

In total, BMC’s total debt is pegged at P468 million which is shared between farmers, other creditors, materialised liabilities (litigation costs), and bank credits or loans.

On the other hand, it has emerged that BMC, at its Lobatse abattoir, has a capacity to slaughter 144,000 cattle per year or 12,000 per month.  Currently, BMC is running at 15% of capacity, slaughtering less than 2000 cattle per month. 

Cattle farmers and feedlotters (those who fatten cattle intensively over a 3-month period prior to slaughter) have estimated that in January and February 2020 there will be less than 1,000 cattle entering the BMC abattoir for slaughter.   This trickle of supply threatens BMC with potential closure as it is insufficient to sustain the business.

Already, BMC is on the verge of failing to meet its contractual obligations to important off-take customers such as the lucrative 1,600-ton Norwegian quota to whom they are required to supply an agreed quantity of chilled and frozen product at agreed prices.

 In January President Mokgweetsi Masisi formed the Presidential Beef Committee with the purpose of investigating the current malaise affecting the Botswana Beef Sector. Over the following months a team including Government Departments and Industry experts investigated the reasons and the extent of the issues creating the current problems.

“A detailed action plan was submitted to the Minister of Agriculture in April 2019 by a BMC-Producer Advisory Committee which set out a full-assessment of the malaise affecting the industry and identified the issues which needed to be addressed to drive the survival and rejuvenation of the beef sector and the BMC,” said industry insider. Sunday Standard has seen this document which appears to have been ignored.

Things came to a head when on the 19th November lawyers representing 13 feedlotters sent a demand letter to BMC claiming payment of an amount in excess of P130 million which BMC has owed them over an extended period, some up to 5 months.  This demand was in respect of cattle delivered to BMC and already slaughtered by them. But BMC ignored the demands and High Court summonses were served on them this week. 

Sunday Standard understands that feedlotters supply approximately 70% of cattle to the BMC for slaughter and are a substantial stakeholder in the industry. “If they are not paid by BMC then the supply of cattle will cease and this is what has happened,” said the same source.

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