SALE OF THE BMC TO THE AMERICANS WOULD NOT BE THE ANSWER The predominance of the beef sector in Botswana predates the pre-colonial period and understandably became a major and strategic sector in the post-independence Government economic plans. When the Lome convention of 1975 offered Botswana beef duty-free access to the lucrative European Union market, the Botswana Meat Commission, naturally, became the instrument by which the State cashed on this market. The high beef prices in the European market meant the BMC could pay individual farmers high prices for their cattle. The distributive effect of this arrangement and its ameliorative impact on poverty in rural households was attractive to Government, and it explained vast subsidies channeled to the cattle sector. Botswana maintains an extensive and expensive cattle disease-control infrastructure that entails thousands of kilometers of veterinary cordon fences and a countrywide network of veterinary and farming advisory centers; The BMC is a long-running monopoly, the only authority that is permitted to export or approve export of beef by other exporters. This beef sector eco-system, it was argued, was important to meet the onerous standards set by both the International Office of Epizootics and the European Union - on disease, hygiene, transportation and identification of cattle - without which the sales to those markets would be prohibited. The idea of a Government controlled monopoly was also intended to right of rural and distant farmers, to fair pricing and to ensure there is always a market for their cattle (basically to ensure that no one exploited or ignored them). Either this arrangement is no longer relevant in the modern day, or cracks that point to its flaws are no longer easy to ignore - there are many flaws associated with this system. For instance when the BMC, for one reason or another, performs poorly, farmers feel the brunt through much lower prices for their livestock or simply by having no conduit via which to sell their cattle. The BMC can perform poorly even during years when the global market is buoyant – when prices rose in Europe during the 2007-8 period, they declined in Botswana. This puzzle is attributable to poor management on the part of the BMC. Such poor performance could also emanate from a range of other factors, including compliance lapses and disease outbreaks that result in the EU’s suspension of beef uptake from the BMC. The 2008-9 period is an example of a near financial collapse experience of the BMC; then there were interruptions caused by Foot and Mouth Disease Outbreaks in the 2009 and 2010. To add salt to injury, the EU banned beef from Botswana in 2011. The discerning tax-payer would have noted Government’s advances to the BMC shortly thereafter, totaling more than P354 million. Most cattle farmers rue the last five years, and tie their own farming decline to the poor management of BMC or to the disorganization beef sector eco-system in general. One of the more emotional episodes of our farming history has to be what happened in Ngamiland in the 1990s, where countless farmers lost their entire herds – the cattle were killed by Government instruction in-order to eradicate the cattle lung-disease. Apparently this was necessary to avoid a nationwide spread of the disease, the consequences of which would render Botswana’s access to the EU beef market extinct. Many farmers are known to have sobbed and wept to see their kraals exterminated. But it is the spirits of the Ngami people that were most affected – they were broken. Since that time, the people of Ngamiland have never been able to regain their cattle-farming prowess. Most Ngami residents are suspicious of Government’s real intentions with their cattle. The new idiom is that those at the helm of Government “love wildlife more than they do cattle, and they love people less than they do wildlife”. Now, upon realization of these many inconveniences, it is generally accepted that a fundamental shift is necessary. The current Government is attracted to the wholesome privatization of the BMC, and the repeal of the BMC monopoly legislation. Recent newspaper reports are quoted as reading into a possibility the Government of Botswana, through the Ministry of Agriculture, giving serious thought to the sale of the BMC for a rumoured amount of P1.4 billion (to an American agricultural group). This may or may not be true. The more important matter is the question – the question of where do we go now with the beef sector in Botswana. In fact, there are two separate questions here: should the Government sell the BMC wholesome, and should the Government repeal the BMC monopoly legislation. The answers are “No” to the first question, and an absolute “Yes” to the latter provided it is in favour of a managed competition in the fashion of the current cellular phone environment. The monopoly power of the BMC, meaning no one is able to sell beef externally without the approval of the BMC is suicidal. It means that the entire farming community and their dependents are held at ransom by what one company does or fails to do and, in the current mindset, also held at ransom by the European Union. This means the entire country can look forward to more poor management episodes, tax-payer money being funneled to finance the BMC, episodes of cattle uptake suspension, as well as more area disease eradications in the style of what happened in Ngamiland. The long-term consequences are that Botswana will not be able to exploit the beef sector as an avenue for more economic diversification, wealth creation and poverty reduction. Our proposal for a managed competition system means a regulatory body could be erected to regulate hygiene, fairness in cattle purchase even from forgotten places and prices (this regulatory body could easily be housed under an existing one if necessary). This body would categorize types of exporters and prescribe the number of players in each category for licensing. This will encourage companies to compete, and those who perform poorly because of bad management will not unduly prejudice farmers. But this also will create opportunities for citizens to diversify within the beef sector and create a locomotive for wealth creation, diversification of the economy, employment creation and poverty reaction. In this way, no one player will or can hold the whole country at ransom. This also means CEOs are not only appointed by Government, and as we have seen in recent times, this has been a major contributing factor in the unending upheaval at the BMC. The next question of whether the BMC needs to be privatized is no longer critical to answer under this new envisaged system. Our preference however, consistent with our policy of strategic investment by Government (through professionally-run management/investment companies) in strategic sectors means the Government will remain an investor in this sector, competing with other players, how this will be done is a detail. We believe that this is the best and most optimal way to build a robust beef industry. Those who will say we are anti foreign investment are wrong, because under our proposal, we will bring more than just the P1.4 billion being discussed currently, as investors come to bid for export licenses under a transparent system that does not depend on whether the current Government likes you or not. At the same time, we will have ensured that the ordinary farmer has a future, and can form consortia with others and with foreign investors to participate meaningfully in the Botswana economy. We have no qualms with this rumoured American company, but even they will note that our Government promises a fairer system in which they will not only profit from investing in Botswana, but they will co-exist with a larger cluster of successful players in this sector. The current haphazardness by Government can lead to ruin of the beef sector, if it has not done so already. Ndaba Gaolathe Umbrella for Democratic Change (UDC)
Posted on: Thu, 16 Jan 2014 05:54:56 +0000
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