Local wheat milling companies may face collapse if the government does not restore the 15 percent wheat levy it had put in place to protect the millers, an official has said.
Botswana Millers Association (BMA) chairman, Nkosi Mwaba said the milling industry is under existential threat from predatory pricing behaviour on imports of finished goods from South Africa. He said this is particularly so in wheat flour products which are being dumped into Botswana at below cost.
Mwaba complained that the removal of critical protection mechanism that was levelling the playing field between Botswana and South Africa by the Ministry of Investment Trade and Industry (MITI) is set to badly affect the milling players.
“MITI is in the process of a 10 year phase out decision on the 15 percent wheat levy that was protecting the local milling industry. The levy is now at 10.5 percent and is being phased out every year at a rate of 1.5 percent,” said Mwaba. The BMA president said maize and wheat millers run integrated operations and without the wheat milling component, the maize milling activity will collapse as well.
“Without the wheat levy, millers estimate that they will not survive longer than five years in Botswana. It is absolutely critical that the Government reconsiders this decision urgently if farmers are to still have an attractive market in the mid-term looking at the bigger picture,” said Mwaba.
According to BMA, its members consume a total of 120,000 tonnes of white maize per annum and this equates to a value of about P500 million per annum. He said their highest consumption figures in recent years show that millers have only been able to access 8 percent of maize crop from local farmers, which is less than 10,000 tonnes. “To put this into perspective, millers are spending a maximum of P40million on local harvest while over P450 million is spent on farmers in SA and other global suppliers such as the US, Mexico, Argentina and Brazil,” said Mwaba. Although projections from local farmers and the Botswana Agricultural Marketing Board point to a bumper harvest this year, Mwaba said there is still a lot of work to be done in commercialising crop production in Botswana. He stated that the Botswana milling companies, through the Maize and Wheat Millers Association, have committed to fully support local farmers and make them a priority. “We have matured as an industry to a point where we are ready to make a firm commitment to support local farmers by buying their crop. The Association does not need to be forced to do so by statute nor by internal pressure but has a responsibility to help develop farming and Agribusiness in Botswana,” he said adding that the P500 million spent on raw material purchases in grain should be going to Batswana farmers.
He challenged the Botswana government to take a leaf from Malawi, Zambia, Zimbabwe who this year have taken decisions to close their borders on maize imports and lift existing restrictions on exports of this commodity.
“We are currently in discussions with various farmers associations across the country to discuss our position and demonstrate our buying power and level of support. We will be inviting various stakeholders to our meetings to strengthen direct linkages and relationships with farmer representatives and other stakeholders,” said Mwaba.
He said they will be playing a proactive role in the development and commercialisation of grain farming in Botswana and are confident that the benefits will soon be seen and felt by the economy and Batswana at large. Efforts to contact Ministry of Investments, Trade and Industry to get their side of the story were unsuccessful at press time on Wednesday since their phones were not answered.