BMC exports beef to UAE
Botswana Meat Commission has successfully been accredited to export beef to the United Arab Emirates (UAE) as of March 2023.
This means the BMC’s new strategic performance plan - MERITING 2022/25 - is paying dividends on its first year. Over and above the lucrative deal, plans are underway to complete accreditation of the BMC Maun abattoir to also gain access to the UAE and the Gulf Cooperation Countries (GCC) within 2023.
BMC developed a four-year strategy and strategic performance in which its theme is to achieve both profitability and sustainability on or before year 2025 mainly through addressing internal inefficiencies, reducing cost burden, sector/value-chain collaborations, reduced dependence on government funds, and enhanced customer relations to re-attract its market share was implemented in January 2022.
Sadly, BMC’s party celebration was cut short as the monopoly beef company’s exports to Norway through the country’s allocation of the Norway/SACU EFTA were frustrated by unwarranted appropriating of the share of the quota by beef exporters in Namibia, leading to the company failing to achieve its target of over P680 million.
While both countries are still addressing the matter through the diplomatic channels, BMC’s well-thought performance strategy faced challenges that regressed its business from achieving the intended and targeted annual turnover of P681 million for 2022.
Other hurdles that affected the monopoly beef corporation from reaching its target include, loss of 45 days of production, as well as cessation of cattle supplies due to the August 2022 outbreak of Foot and Mouth Disease at Zone 6b which borders Zimbabwe.
However, all was not lost as BMC enhanced delivery for the Norway/SACU EFTA quota to 77 percent in 2022, an improvement from 56 percent achieved in 2021. Further, the business was able to introduce competition of distributors for its products within Norway, as well as the rest of Europe.
In addition, unlike in the past, multiple competing distributors are now assigned to market BMC products in Norway. This has seen BMC product selling price per kilo and the benefit was passed over to farmers in the form of buying price increases for 2022.
Minister of Entrepreneurship, Karabo Gare told Parliament that supplies to BMC have also been seriously challenged by live-cattle exports dispensation, which for the year was able to export about 176,476 cattle for year 2022, against BMC’s slaughter of 36,125 in the same year.
Gare was answering a series of questions asked by Member of Parliament for Lobatse, Dr. Tlhapelo Matsheka who amongst others asked him to apprise the house on what strategies and actions have been or are being taken to restore the BMC to profitability and sustainable service to the farming community, specifically if there is a strategy, what has been the progress in the roll out of the strategy since its commencement.
Gare highlighted that under funding the strategy - the business, due to its comprehensive and persuasive strategy was able to raise P120 million from the government as a loan (Public Service Debt Fund Loan) and also P300 million Government Guaranteed facility from Rand Merchant Bank Botswana - an FNB Botswana corporate banking subsidiary.
He said despite this being a government guarantee facility, its acquisition had never been automatic – as it required elaborate business case and convincing to both the Ministry of Finance and the bank’s independent credit control processes. This blended financing approach, aligns to the President Dr. Mokgweetsi Masisi’s agenda – of lessening dependency on the government funds, and thus attracting newer investments and borrowings given the business’ viability.
Further, the strategy seeks to attract more private sector financing, with a view of securing a technical partner (s) to enhance BMC’s commerciality. To this effect, the BMC has sent out in the market Expressions of Interests (EOI’s) for some of its assets both core and non-core as a way of ensuring maximum value and returns are realisable from these assets, as well as optimising the value chain.
He said through improved cattle supplies/throughput, but also credited to its strategic procurement initiatives – the strategy was able to deliver plant capacity utilisation at 21 percent, being an improvement of 2021’s utilisation of seven percent.
“The achieved improvements were however short-lived given the impact of live-cattle exports and FMD outbreak”.
Further that for 2022, the processing plants also experienced repetitive setbacks due to plant equipment failures. This was made dire – given BMC’s outdated and dilapidated infrastructure, hence its high maintenance costs
and increased plant unavailability.
'There is need to seriously invest in plant equipment at BMC and bring down its maintenance costs, hence the business dedicated a portion of its P120 million PDSF loan to fix some of the critical equipment, yet very inadequate to the desired state,' he explained.
As part of sweating the value-chain, the BMC is currently engaged with Special Economic Zones Authority (SEZA) and Local Enterprises Authority (LEA) to deliver on a long-awaited national project dubbed the Leather Park.
To this end, given its existing assets already serviced land, skills and machinery - the BMC is courting these state entities to revive the BMC tannery – so that it goes back to producing wet-blue tanned leather, and in the same guarantee/securitise adequate base raw-material for the Leather park project.
Gare said under the technology adoption and digitisation for 2022, the business was able to identify lapses within its technology and information services infrastructure. To this end the business allotted about P6.5 million from the P120 million PDSF loan secured from Government of Botswana – to semi-automate some of its production processes at the Cannery plant, to procure a warehouse floor management system, to ensure product’s visibility, but also secure other production process equipment to ensure better delivery of large-scale customer orders, that is, Government canned stewed steak contract.
Talking on improving marketing and branding of BMC products and services, Gare highlighted that the strategy enhanced delivery for the Norway/SACU EFTA quota to 77 percent in 2022, an improvement from 56 percent realised in 2021.
He said the strategy was also able to re-introduce improved canned product mix, especially its canned ECCO beef, which had been recalled from the market in 2021. It further saw the business embark in Market development programme through participation at the Dubai Expo 2020 in February 2022.
Gare said evidently the turnaround of BMC, while achievable – requires a lot of effort, investment and guidance – as such its transfer to the Ministry of Entrepreneurship (MoE) is intended to realise its commercial potential and such is prioritised and supported from a policy point of view – while Ministry of Agriculture focuses on enhancing primary production at farm or holdings level and other added services.
MoE’s mandate is to drive the entrepreneurship ecosystem in Botswana, and be able to drive BMC’s commercial performance to attract and bargain better with private sector investment.
Further that the strategy came at a time when BMC’s overall performance had critically declined, the business was not attractive to cattle suppliers, there had been an exodus exit of both management and other specialised human skills –but more importantly its immense leaning over the government funds has been untenable, and as such needed an urgent turnaround.
He said the strategy set its turnaround on seven critical strategic imperatives being organisational redesign to transform its business model, engagement of key stakeholders, technology adoption and digitisation, maintaining quality standards, funding of the strategy, optimising the value chain, and improving the marketing and branding of BMC.
All of these imperatives were prioritised by engaging local suppliers, the export market, financial institutions, regulatory entities and members of staff, Government and all other identifiable resources within the Botswana beef value-chain.
Gare said admittedly, the strategy development process acknowledged previous technical work studies that had been done within the BMC, but also the sector as a whole, however having not been fully implemented. These included the IDI turnaround recommendations of 2019/20; KMPG beef export liberalisation study of 2018, MoA/PEEPA BMC Privatisation of 2018/19, among others.