Sinking BMC pins hopes on non-EU market

Staff Writer | Friday April 8, 2011 00:00

 

The Commission has already tapped into the South African market - an existing trade route - while protocols with Zambia are in place for supply to that country.  Last month, the department of  veterinary services de-listed Botswana from the EU in order to rectify compliance issues related to traceability of meat products. Exports to fulfill the multi-million pula EU orders are expected to resume in six months.

It emerged this week that the suspension of exports is taking a heavy toll on BMC's finances, threatening the +1,000 workers, competitive prices paid to farmers and the cattle ranching industry at large.

The BMC exported products worth P868.8 million primarily to the EU last year, supporting export parity payments to more than 6,000 farmers and propping up tens of thousands of dependents, support industries and other sectors of the economy, by extension.

Within the EU, Norway alone accounted for the majority of these exports due to a money-spinning 2,700 tonne quota enjoyed by the BMC and its Namibian counterparts.

However, despite the closure of the Commission's prime market, it continues to employ and pay salaries to all staff, as well as support export parity prices to farmers as slaughters continue uninterrupted at Lobatse and Francistown abattoirs.  These costs do not include the BMC's other overheads, of which electricity is among the highest as the parastatal is among the country's biggest consumers of power.

CEO David Falepau said concerted efforts were underway to open new trade lines to support the Commission in the absence of the EU market. 'We are exporting to South Africa and have protocols with Zambia,' he told Mmegi yesterday.

'We are also discussing access into non-EU markets such as the Middle East and China, and there is also potential in the Eastern bloc, mainly Russia,' he said.  'We need to take our cattle out of the feedlots and we are discussing with potential customers in these countries right now. The foot-and-mouth disease outbreak in South Africa could prove favourable to us in terms of the fact that they have to hold products from one zone in their country.'

He added that the BMC was attempting to pick markets that would represent the lowest losses when compared to the EU. 'We are trying to pick the right markets,' he emphasised. 'Those closest to the EU are about five to 10 percent below EU prices, so we will incur losses. Infact, we are going to incur losses.'

Falepau said the BMC had been in discussions with its EU customers who were generally understanding. He explained that products from the BMC made up a fraction of the orders made by EU suppliers and thus 'they are happy to say it's ok, we have a contract and we are prepared to wait.' The key Norway quota, however, will require fulfilment before the end of the year, meaning the BMC and the Department of Veterinary Services will have to move fast to prove adherence to EU rules.

In the meantime, it is expected the EU could move to accredit local farms that are allowed to supply its market. The accreditation will ensure that only animals adhering to the EU's stringent conditions for imports are slaughtered.

The move will be similar to action taken against Brazil in 2008, where the EU slapped a ban on meat imports from the South American nation and created a list of approved farms. Brazil presently has about 2,000 farms.

'The department of veterinary services has an action plan to address the livestock traceability issue,' Falepau explained. 'This involves feedlots, fixed farms and cattle posts.

'When Brazil had the same issue, the EU accredited qualifying farms. For us, the feedlots will be very quick to accredit, then fixed farms. Cattle posts could be a bit harder.' As in Brazil, such a system could narrow accessibility for small-scale farmers who may have to resort to simply providing young stock to bigger producers, who will then rear these, ensure adherence to EU rules and slaughter.