Farmers oppose amendments to BMC Act

MBONGENI MGUNI
Staff Writer | Friday April 23, 2010 00:00

 

Amendments to the BMC Act, which dates from 1965, could be tabled in the winter Parliament which is scheduled to sit around July. The proposed amendments date back to the beginning of the decade and were partly motivated by a 2005 World Bank/Botswana Institute of Development Policy Analysis (BIDPA) study into the beef industry's perennial challenges.

Government, which says it has undertaken 'extensive consultations' with stakeholders, argues that the proposed amendments will enhance the productivity and competitiveness of the beef industry.

However, in a position paper made available to Business Week, the BCPA says the proposed amendments are more harmful than beneficial to the industry. Debate is high on the contentious Section 21 of the Act, which gives the BMC a monopoly in the export of beef and beef by-products as well as in the operation of export slaughterhouses. Under the proposed amendment states, 'no person shall export cattle or edible cattle products from Botswana unless he or she possesses a permit in writing to do so issued by the Minister'.

'To create a conducive environment for investment, there must be statutory certainty ensuring a firm's right to export cattle and edible products from cattle,' says the BCPA. 'This sub-section should therefore grant the right to export cattle and edible products from cattle unless there is a compelling reason in the national interest to refuse an export permit.'

The cattle producers have proposed that the amendment should continue: '...which (permit) shall not be unreasonably withheld or delayed and which shall not be denied unless there is a compelling reason in the national interest to refuse an export permit. Where an export permit is refused, the Minister shall give reasons for the refusal and an opportunity for the refused party to appeal'.The government is also proposing another amendment to Section 21 stating that 'the Commission may slaughter cattle on behalf of any person for the purpose of export from Botswana of edible products from cattle by such person'.

To which the BCPA argues that this amendment should include the BMC returning all parts of the slaughtered cattle to farmers at a reasonable price as set by an independent authority or the minister. The farmers say this price should not exceed the value of the beast's offals.

'Whenever a state monopoly is deregulated, a new regulatory framework is normally put in place to prevent the ex-monopoly from abusing its dominant market position to unfairly stifle competition,' the BCPA says.

'If third party access is made discretionary, the BMC could continue to act in an uncompetitive manner simply by replacing its statutory export monopoly with a de facto commercial export monopoly either by restricting access to the BMC's two EU-approved abattoirs or by charging exorbitantly high fees to make slaughtering cattle at the BMC uneconomic.

'It must therefore be mandatory under the BMC Act for the BMC to slaughter cattle on behalf of third parties for a reasonable fee which should be set by an independent authority.'

The cattle producers also argue that the current levy of P2 per head delivered to the BMC and directed to the Development Reserve should be increased to P10.

Government intends to do away with a figure per head and replace it with the minister's discretion. The BMC uses the Development Reserve to finance its deficiencies and for capital expenditure shortfalls.

'This sub-section is an important safeguard to limit the discretion of the Commission to ensure that the BMC focuses on its core activity of slaughtering and processing cattle and marketing beef and beef by-products,' says the BCPA.

'Otherwise the BMC could divert producer funds into new forms of business unrelated to slaughtering and processing cattle which should otherwise be applied to maximising everyday producer prices. Keeping this sub-section to a minimum would also restrict the BMC's ability to encroach on private sector activities.'

In their response, the cattle producers also challenge plans to give the BMC the discretion of turning away certain producers. The BCPA also argues that of the 10 BMC Commissioners, six should be knowledgeable in one or more of the BMC's core activities while the rest are submitted by the cattle producers.

Government's amendment states that four names will be submitted by livestock associations while the minister has the discretion of appointing people other than those proposed by the associations.