Ranchers speak out on proposed BMC Act

| Friday April 5, 2013 00:00

While we agree with the removal of the beef export monopoly, such a step should be preceded and underpinned by an informed comprehensive industry and sector review dealing with the policy and long term strategy framework for the livestock industry in order to put the industry as a whole on a sustainable basis.

We believe that the proposed amendments will not have the desired effect of creating a sustainable beef industry. The removal of the beef export monopoly should be part of the comprehensive and broad reform measures in the sector to ensure its sustainability. To give effect to these economic reforms there is need for institutional, regulatory and legislative changes underpinned by a comprehensive policy and livestock strategy including, among others, the removal of the BMC beef export monopoly. 

The proposed approach assures Batswana farmers that the removal of the monopoly is not done in isolation as if it is only intended to address the poor performance of BMC.  Under the proposed approach, amendments could lead to a situation where the current BMC public monopoly could be replaced by a private monopoly, the BMC in its current stage would not survive competition.

In other sectors, such as electricity supply industry reforms and telecommunications sector reforms spearheaded by other Ministries, the legislative and regulatory changes were preceded by industry and sector studies which sought to establish a clear policy and institutional and regulatory framework and the enactment of appropriate legislative changes to give effect to the industry reforms proposed. 

Reforms in the livestock sector should follow the same route lest we end up where we never intended.The livestock sector faces many challenges that will need to be addressed if it is to be put on a sustainable basis.These challenges have been identified and discussed below.

Challenges facing the industryThe Botswana Meat Commission needs to be part of the competition landscape going forward but currently itis in a poor operating and financial position which will need to be addressed to ensure that it is a viable player in the new liberalised environment. This will require the successful restructuring of the operations and financial position of the Commission which would entail introducing new technologies, new ownership and governance structure at the BMC.

Currently BMC is often called upon by government to undertake projects that are purely a public service and would not be undertaken on the basis of business considerations, such as the operation of the Maun and the Francistown abattoirs. In the new competitive environment, this role would have to be separated such that BMC only undertakes operations that make business sense and, if for any reason, the government calls upon BMC to undertake a public function the cost should be met from public funds, as is the case with rural electrification and rural telephony ' nteletsa'

BMC is currently burdened by over capacity as it runs three abattoirs that are all operating below capacity. Given the size of the industry as a whole, it is unlikely that there will be many players in the liberalized environment after the removal of the BMC monopoly. Experience coming from countries, such as Australia and Namibia shows that at best, there will be a few players. It is important therefore that BMC is not allowed to collapse and it is part of the new competitive environment. Otherwise BMC will be replaced by a private monopoly.

BMC has suffered from poor management, weak financial controls, poor governance and unsupportive regulatory controls by the Department of Veterinary Services, in addition to the dual role of carrying out a social function in addition to a trying to run as a sustainable business.

The existence of other related legislative instrumentsThere exist other legislative instruments such as Livestock Control Act, the current BMC Act, the Meat and Livestock Industry Act which talk to the regulation of the sector.  Under the existing pieces of legislation, the President, the BMC, the Director of Veterinary Services among others, play a regulatory role in the livestock industry. The proposed amendment to the BMC Act will add the Ministry to the list of regulators in the sector.

Lack of a comprehensive strategy for the livestock sectorThe lack of a strategy for the livestock sector which talks to the global market requirements for livestock product has resulted in low productivity of the existing national herd as a consequence poor husbandry practices, poor research and extension services, and issues of lack of role clarity among all the stakeholders

Clarity of institutional rolesThere is clearly a need to realign institutional roles such that there is a clear distinction between the role of the Ministry as a policy maker for the sector, and the role of an industry regulator concerned with the licensing and operational issues. The role of the Ministry should be confined to defining the policy and strategy for the sector and there should be an independent regulator for the industry and operational issues should be left to other stakeholders primarily in the private sector.

In this connection the role of the Director of the Veterinary Services is of critical importance. DVS has failed to run the Livestock trace back System (LITS) largely as a result of the poor resourcing and management.  This is unlikely to change as the budget and other resources are not like to be increased substantially in the near future.

There is need therefore to clarify and in some cases change the roles of some players, if we are to avoid a repeat of the LITS experience. Such changes may involve the application of ear tags by the farmers and a meat authority or engaging a private contractor to manage the data base, while the DVS plays an oversight role.I believe all the above challenges have been raised before by the Team headed by M Joseph Legwaila which had been appointed by the Minister of Agriculture to look into the BMC woes.

The land tenure systemThe current land tenure system as it affects the livestock industry which is dominated by the communal grazing system is unlikely to form the basis for a globally competitive and growing sector going forward. The communal sector currentlysupplies about 80% of the cattle available for slaughter.  If the country is to achieve its objectives for the sector of competing effectively in beef exports to the EU, the communal grazing system must change along the lines of the TGLP policy.

Section 21 of the BMC Act is not intended to create a regulatory framework instead it was meant to control the powers of the regulators under the Control of the Livestock Industry Act.Section 19 and 29 of the Control of Livestock Act designates the Director of Veterinary Services as the licensing authority for export of cattle and beef.

Section 29 of same Act designates the President as the licensing authority for the licensing of export abattoirs.The proposed amendment gives the Minister absolute powers to give licenses for the export of cattle and cattle products which powers are bigger than those of the President under the Control of Livestock Act. Therefore there will be three parallel licensing authorities.  The proposed amendment will therefore give the minister absolute powers to give licenses for the export of cattle and cattle products which powers will exceed even those of the President under the Control of Livestock Act. There will also be three parallel licensing authoritiesBMC should not be forced through legislation to slaughter cattle for its competitors. The players should themselves set up EU compliant infrastructure and compete with BMC on an equal footing. 

Conclusion and recommendationsA comprehensive approach is required to create necessary foundations for an efficient and globally competitive livestock industry. This calls for a comprehensive set of reforms going beyond the proposed amendment to the BMC Act which are grossly inadequate in addressing the needs of the sector on a sustainable basis.

What is required is to undertake a thorough and comprehensive sector analysis along the lines of the approach previously used   in other sectors, such as electricity supply industry and the telecommunication sector in order to identify how the needs of the sectors can best be met, as a basis to underpin any reforms including any legislative changes needed to propel the industry forward.

There is also a need for separating and clarifying the roles  of some of the stakeholders and the creation of a single independent regulatory authority for the industry with the necessary checks and balances, rather than to create an additional regulatory machinery, with unfettered discretionary powers,, as envisaged by the AmendmentFinally, it is our firm belief, as Sandveld Ranchers Association, that the removal of the BMC export monopoly in isolation, as envisaged by Government, while an appropriate cause of action to follow at the appropriate time, needs to be deferred for now, but should be reintroduced as part of a package of well-reasoned liberalisation reform measures aimed at taking the beef industry to a globally competitive level. These measures should include the successful restructuring and recapitalisation of BMC, the establishment of a single independent regulatory authority, the development of a progressive policy framework to make Botswana compete effectively with beef exporting countries like Brazil and Australia.Sandveld Ranchers Association