New BMC prices to entice farmers - CEO

The new price structure that came into effect at the Botswana Meat Commission on Monday is meant to entice more Batswana into cattle farming and restore their waning confidence in the abattoir, Dr Motshodi Raborokgwe, the Chief Executive Officer of the BMC, has said. "We want people to leave their jobs and go into beef farming. We have realised that if the prices of cattle remain low, there will be a decline in beef breeding," Raborokgwe said in an interview.

An unprecedented development in the revised price structure is the breaking of the prime grade into two. Another is the awarding of bonuses for well-bred animals.

Over the years, Botswana farmers have complained that the BMC was stinting them on its prices for their cattle, the only source of livelihood for many of them.

As a result, they preferred to sell to local butchers who offered better prices. Others yet preferred to sell to South Africa, where their cattle commanded better prices even after deductions of export and handling charges. This is the third time in three years the BMC has had to revise its price structures as farmers withheld their cattle from the mainly export abattoir. 

In January last year, the BMC increased its prices by an average of 40 percent across the board in an effort to alter declining throughput and profit margins. 

By mid-year, the national abattoir had realised little improvement, forcing it to bring its prices closer to those offered in South Africa.

In the new price structure, the BMC has divided the prime grade into two - the Prime Zero Tooth grade and the Prime 2 Tooth grade. These are now parallel to South Africa's A grade and AB grade respectively. 

Raborokgwe said Prime Zero Tooth refers to cattle aged up to 20 months, while Prime 2 Tooth refers to cattle aged between 21 and 25 months.

If calculated at this week's South African rate of P18.02 per kg, a 20 month-old beast with a minimum weight of 180 kilograms should earn a farmer P3243.60, he explained.  The minimum buying price for a 20 month-old beast weighing 180 kg should earn P3 078, if calculated at this week's South African A Grade rate of P17.10 per kg. However Raborokgwe explained that even though the South African prices and the regional export parity prices (epp) fluctuated week after week, they still remained attractive to farmers.
More good news to farmers is that beasts weighing up to 180 kg are now eligible to be categorized as prime.

In the past, a beast had to weigh at least 200kg to be considered for prime grading.
The BMC CEO says the price structure for the Super Grade (beasts aged 2 to 3 years), Grade 1 (2 years and 9 months) and Grade 2 (aged 3 years and 3 months) will all be paid at improved fixed rates of P10.74, P9.99, and P9.24 per kg respectively.

In an effort to encourage farmers to breed strong and healthy cattle, the BMC has also introduced bonuses for well-bred cattle.

For the prime grade, for example, bonuses will be added if a carcass weighs above 205 kg. A farmer whose prime grade animal weighs less than 180kg will suffer penalties. For the rest of the epp grades, bonuses will be added for weights above 250 kg and deducted for carcasses weighing less.

"Our efficiency is directly tied to the number of cattle we get. The more cattle we get, the less unit cost of production.

We are increasing prices to entice the farmer to sell to the BMC," Raborokgwe said.

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