BMC dragged into Namibian beef wars

MBONGENI MGUNI
Staff Writer | Friday April 16, 2010 00:00

 

Botswana and Namibia share the 2,700-tonne quota, which dates back over ten years and has been the lifeblood of beef exporters across the borders. The bitter dispute features Namibian parastatal Meatco and private sector entity Witvlei, while the dispute centres on a 2 700-tonne export quota to Norway.

The BMC has been dragged into the spat by virtue of its decades-long association with Meatco in the fulfilment of the quota. The Norwegian deal is a money-spinner for the BMC, contributing seven percent of turnover or P47.7 million for 2008. In that year, Norway was the BMC's fourth largest contributor to turnover after the United Kingdom, Botswana and South Africa.

Witvlei's Managing Director, Hendri Badenhorst, last week accused the BMC and Meatco of conspiring to squeeze the private company out of the Norwegian quota by filling the entire 2 700-tonne quota on the first trading day of January. Badenhorst, in a letter of complaint to the Meat Board of Namibia and other parties, said the BMC and Meatco had carved up the 2 ,700-tonne quota among themselves to the exclusion and financial disadvantage of Witvlei.

'Meatco and its Botswana counterpart placed more than 2,700 tonnes of meat in Norway on a 50:50 basis, not anticipating to share the market with any competition', Witvlei officials said. 'This is the first time in the meat industry that this has happened.'

Witvlei has sent letters of complaint to the Namibian Competition Commission, the Namibian Meat Commission and the Norwegian Competition Commission, arguing unfair trade practices.

This week, Meatco shot back arguing that under the first-come-first-served principle that the quota operates by, Witvlei was granted the right to supply 400 tonnes which represents 20 percent of the private company's annual production. Meatco was granted 955 tonnes or four percent of its annual production, while the BMC secured 1, 345 tonnes or eight percent of the local parastatal's 2008 production.

'From Mr Badenhorst's email letter, it seems clear that Witvlei is primarily focussing on the Norwegian market and expecting the other quota participants to give up their proportionate shares of the quota to benefit Witvlei', said Meatco CEO, Kobus du Plessis. 'This would result in significant losses to the Meatco mean producers - the farmers - who share the total profit of Meatco and would effectively result in Meatco producers subsidising Witvlei.' The battle between the Namibian exporters could not have reached local shores had it not been for developments this week that may jeopardise the BMC's supply lines to Norway.

Reports from Namibia indicate that Witvlei's complaints could result in the conversion of part of the 2, 700-tonne quota into an auction quota. Such an arrangement would severely cut BMC's earnings from the Norwegian quota resulting from a drop in prices of beef exported to Norway. The European country is reportedly proposing that 1, 000 tonnes of the 2,700-tonne quota be converted into an auction quota.

'This could result in - at expected auction prices - a 20-million Namibian dollar (P18.6 million) direct loss to Namibia and Botswana farmers,' said du Plessis.While confirming knowledge of the Namibian dispute, BMC officials referred questions to General Manager (Marketing), Sebitso Molapisi, who was said to be off sick at press time while no comment could be obtained from the Chief Executive Officer, Motshodi Raborokgwe.

The Namibian beef wars come at a time when local producers are fastidiously studying the proposed amendments to the BMC Act with a view to assessing the pros and cons of the initiative. At present, the BMC is the sole exporter of beef and edible beef products, purchasing cattle from farmers at export parity prices.