Wednesday, February 21, 2024

Norway’s new beef quotas may shave off BMC profits

Botswana Meat Commission’s (BMC) profit margins are expected plummet following a decision by Norway’s minister of agriculture and food, Geir Pollestad, to review the beef export quota system with some African governments.

According to Nationen—a Norwegian daily newspaper that primarily targets farmers and the agricultural sector—Pollestad wants to review current beef trade agreements in light of changes in the global trade pattern for African beef.

The Namibian Sun quotes Pollestad’s email from his agriculture ministry’s press department, which notes that: “Some of the meat from SACU is now imported via the EU and at a different price than previously. The trading pattern has thus changed. We will go through the changes to get an overview of the development, and whether there are conditions that are in conflict with the agreements.”

Even though official statistics are unavailable, information that is currently available indicates that the annual Norway quota generates around 10 per cent the revenue received by the BMC. BMC is responsible for purchasing, slaughtering, processing, and marketing all beef and beef products produced in Botswana for sale in both local and international markets.

Currently, the Scandinavian nation is granted privileged access to 3,700 tonnes of beef from Botswana, Namibia, and Eswatini annually through the Norway quota, which was formed under the Southern African Customs Union (SACU)/Norway European Free Trade Association (EFTA) quota agreement. Under the terms of the SACU/EFTA agreement, Botswana and Namibia share 3,200 tonnes equally, with the remainder going to Eswatini.

Although beef exports to the Scandinavian nation and the European Union (EU) are a lucrative market for Botswana’s cattle industry, BMC failed to meet its 1,600-tonne quota to Norway in 2021 and 2022 due to a lack of supply to its abattoirs from local farms. At the time when BMC failed to fulfil its beef quota, the Meat Board of Namibia fulfilled its 50% allocation (1600 tonnes) of the 3200-tonne beef quota for 2021. Furthermore, Namibia was able to cover Botswana’s deficit of about 700 tonnes after failing to provide 50% of its part of the quota.

For BMC, the Norwegian quota or market represents an exceptionally profitable supply agreement that has been referred to as ‘the best market value.’

A shipment of beef from Botswana to Norway was returned in 2023 due to a mis-issued certificate, prompting BMC and some ministry of Agriculture officials to launch a potential sabotage probe. According to reports, at that time, a mistake in laboratory certification forced Botswana to recall beef valued at more than P28 million.

A clause in the agreement between SACU members and Norway states, “Norway agrees to eliminate all customs duties including ad valorem duties applicable to beef meat originating in Botswana or Namibia.”

Although the BMC is experiencing financial difficulties and striving to address the shortage of ear tags, the parastatal states that they currently have enough supply to meet external demand.


Read this week's paper