Beef producers call for caution on BMC privatization
Correspondent | Tuesday April 4, 2017 15:52
The Government has communicated and consulted key stakeholders concerning the proposal to sell the Francistown abattoir, to invite a strategic equity partner on the Lobatse abattoir and to retain the Maun plant as a buffer against the FMD, as well as to create a framework to regulate the liberalised cattle industry.
The Ministry of Agriculture (MOA) submitted a proposal to Cabinet in September 2016, setting out how Government should go about privatising BMC. Cabinet directed that consultations should be held with the farmers before any decision can be taken on the suggestions made by MOA.
BNBPU had a briefing meeting on February 26, 2017 with the Minister, Patrick Ralotsia. He informed BNBPU that Government is in the process of making a decision to privatise the Francistown and Lobatse abattoirs as Government can no longer continue to subsidise the commercial operations of BMC. Representatives of the BNBPU executive have attended all the nationwide briefing meetings of the Minister with different farmer associations to get the reactions of the farmers.
The privatisation of the BMC is not being raised for the first time. In 2012 there was an attempt to amend the BMC Act to pave way for the liberalisation of the beef export market and to privatise the BMC. The proposal was rejected by Parliament as the cattle producers had not been consulted.
Subsequent consultations in Francistown in September 2012 and in Otse in April 2013 resulted in enquiries, one led by former Ambassador, Joseph Legwaila and another by MP Mephato Reatile, both of which suggested certain strategic interventions in order to ensure the future sustainability of the BMC and the cattle and beef industry.
At the Otse consultative conference, resolutions were adopted, amongst others that there:
- Shall be a reform in the beef industry to ensure that the sector is profitable and that these reforms should be implemented after thorough sector study in the same way as it was done with telecommunications sector and not merely to focus on the removal of the BMC monopoly and amendment of the BMC Act.
That producers, through the BNBPU, shall have a say in the industry reforms.
That Government committed itself to always recognise the BNBPU as the official representative of cattle producers in Botswana and to provide Union with financial support through the cattle levy fund and further that the producers should and will be supported and capacitated to have a meaningful contribution on the running of the BMC.
It is of grave concern that it has taken more than four years to implement these resolutions. Yet, without the benefit of a detailed sector study, as envisaged by the Letsema resolutions, the ministry had the audacity to present such privatisation proposal to Cabinet without prior consultation with the BNBPU.
The BNBPU has attended all of the Minister’s consultative meetings with the farmer associations throughout the country. A number of common strands have emerged which, we believe, should help to reshape the planned privatisation of the BMC. These include, amongst others,
The need to ensure that the national abattoir is returned to a financial position that is stable and sustainable in order that producers get a fair price for their cattle;
The producers would like to play a central role in the transformation of the industry so as to influence the direction and control of the operations of the national abattoir going forward;
The farmers support privatisation of BMC but only to the extent that ownership of the commercial abattoirs (Lobatse and Francistown) is placed in the hands of the producers and for the producers themselves through a national cooperative, in partnership with a private sector, to run the national abattoir on commercial lines. The equity partner should bring the requisite capital, technology and industry expertise;
Any policy reform on the future of the industry and the BMC must be informed by the outcome of a liberalisation study and the regulatory reforms that are being undertaken by the ministry and BNBPU.
Draft Resolutions
It is recommended that:-
BNBPU is supportive of the plan to separate the Maun abattoir from the EU compliant abattoirs and to operation the plant as a buffer to prevent the spread of FMD into other production areas. Furthermore, BNBPU would like to encourage Government to regulate and subsidise the sale and export of cattle and beef from the red zones in a manner that will ensure that cattle producers in those regions receive a fair price for their cattle compared to their counterparts in the green zones;
The BNBPU is proposing that the Francistown abattoir should be placed under care and maintenance, instead of being sold, until the liberalisation and commercialisation studies have been completed.
In the interim, cattle producers in the area should be assisted to sell their cattle to the Lobatse abattoir.
Naturally, that will relieve Government the burden of subsidising the plant; As regards the Lobatse abattoir, any decision regarding the future of the plant should await and be guided by the outcome of the liberalisation and commercialisation studies. Producer prices should henceforth be based on Export Parity Pricing and should be paid on time;
The BNBPU supports the establishment of an independent regulator (the Meat Board) to regulate the sale and marketing of cattle and beef both locally and in the international market; to manage the traceability system, set and enforce production and marketing standards, licensing of abattoirs and to conduct market research and intelligence;
In consequence, the Minister must defer submission of the Cab Memo on the privatisation of BMC and export liberalisation and to refrain from dealing in any BMC assets and/or business until the KPMG and BNBPU studies have been completed;
The BNBPU Chairman, by virtue of that position and the strategic importance of the Union to the life of BMC, should be appointed the ex-officio member of the BMC Board. The BMC Board should be restructured to allow for more producer representation in the critical decision-making of the Board.
In conclusion, the BNBPU supports separation of the BMC abattoirs and the privatisation of the Lobatse and Francistown abattoirs. However, producers would like to play a leading role in this transformation exercise. Government’s participation, if any, should be limited to a Golden share which will enable Government to intervene only in very exceptional circumstances.
Botswana National Beef Producers’ Union (BNBPU)