BMC raises prices to boost throughput

The Botswana Meat Commission (BMC) has decided to adjust purchase prices of higher grade beef in a bid to increase sales for the lucrative EU market. On Monday, the abattoir issued an announcement stating that the incentive will bring more compliant cattle supply to the Lobatse plant.

Mmegi reported that in an interview with BusinessWeek, public relations and communications manager, Brian Dioka said BMC currently provides its abattoir needs with 70 percent of cattle bought through its field-buying, also known as Direct Cattle Purchase (DCP) programme, whereas privately owned feedlots only supply 30 percent.

The cattle-grades of prime to grade two will benefit from an immediate increase of 5 percent and also attract an incentive of between 30 thebe to 75 thebe per kilogramme based on attaining prescribed weights of between 200 and 270 or more kilogrammes.

Compliant cull-cows attaining grade three will immediately get an increase of 10 percent.

"This anomaly meant for BMC to achieve at least 70 percent of its sales proceeds or even supplier obligations it had to rely on cattle it has bought on the field, worse still, which are only sellable after three months given the fact that they are non-compliant to EU or global requirements," he said.

Dioka indicated that the adjustment therefore seeks to redefine the role of BMC and gradually increase that of the farmers within the beef value-chain. This means BMC will now correct its undue feedlot-expenditure that strains or dries the cashflow of the business, but also which has resulted in late payments to beef farmers or suppliers this year.

He added that the alignment of prices will also give feedlot hopefuls in Botswana a golden chance to take up the business of providing finishing facilities or feedlots and supply BMC with only compliant cattle.

"This ultimately enhances the inclusiveness of all farmers in the sector, but also results in making BMC achieve profits for the farmers," he said.

According to Dioka, the alignment affects and benefits all private feedlot-holdings that are EU-registered, and was effected June 15, 2015.

"We should also state that the incentives attached will benefit only private feedlotters that have signed contracts of supply or livestock procurement agreements (LPA) with BMC, detailing the time, quality and quantity agreed to supply," he said.

Dioka explained that the next review of the Carcass Dead Mass (CDM) prices will be in October 2015, where both parties will review progress made since June 15.

"If the throughput to BMC shows sustained increase, this would then allow for BMC to reduce going out to the field to buy non-compliant cattle, as this now will be the responsibility of private-owned feedlots," he said.

He stated that the alignment, makes BMC prices even better than those in Namibia and South Africa.

Chairman of the Botswana National Beef Producers Union, Madongo Direng said the alignment of CDM prices with cattle field prices is a welcome development.

"This new price structure has seen a slight upward movement of the CDM prices to correspond with the current field prices," he acknowledged.

However, he said the field prices are generally lower than the production cost, much lower than prices producers receive in countries, which export to the EU market like Botswana. He added that these prices have only marginally changed since DCP was introduced in 2009.