Why the industry is on its knees

BG: You have been following developments at BMC. What do you think went wrong?
Raborokgwe: The Board is too involved in day-to-day management of BMC.
BG: How did we get to be where we are?
Raborokgwe: During my time there was poor corporate governance to a point where the Board was micromanaging BMC, to an extent that it was setting beef prices, which should have been left to market forces.
BG: How do you think throughput should be improved?
Raborokgwe: While I was at BMC, we resolved throughput problems by going out to farmers and putting in structures to ensure that even a farmer with three cattle is able to sell at BMC, by opening BMC offices countrywide. This improved throughput. We also fed cattle we bought in feedlots. This improved product weight (CDM) and quality.
BG: How did you resolve the Board interference?
Raborokgwe: That was a major challenge for me, such that I ultimately resigned as CEO of BMC.
BG: Do you think politicians are meddling in BMC affairs?
Raborokgwe: NO I don’t think so, politicians are supportive of BMC success.
BG: Having been at the helm of BMC, how do you feel when you learn that the abattoir has now lost its European Union (EU) market?
Raborokgwe: Obviously it is painful, also because I am a beef cattle farmer. Thankfully, Lobatse abattoir has been relisted by EU, and hopefully Francistown will be opened soon as well.
BG: As former CEO, why didn’t you look for alternative markets apart from the EU?
Raborokgwe: There is a market for beef the world over, but we had to go for the market with the highest net returns, that is the EU market. Even if you are to export to China, they will still require more or less the same sanitary conditions as EU.
BG: Do you think the EU requirements are too stringent?
Raborokgwe: The EU requirements are what the EU consumers want. So if we want to sell there, we have to meet their requirements. It is a challenge to meet the EU requirements with an old abattoir like Lobatse, but we have no choice but to abide.
BG: There are business interests at play at BMC with reports that some business people are looking at an opportunity to buying BMC. Did you experience anything as such during your time?
Raborokgwe: There are people who want to ensure that BMC collapses and then buy     it for a song. Some board members did not have the fiduciary interest of BMC and were more interested in how they could benefit from BMC as individual farmers.
BG: What is your response to suggestions that BMC should export live cattle?
Raborokgwe: Live cattle are a raw material. We will be exporting jobs to other countries. Look at the diamond industry; it is moving away from exporting raw diamonds through downstream beneficiation. This is creating jobs, we should continue to do the same. It is only a few beef farmers who can export live cattle, and this would squeeze the small communal farmer, who owns the majority of cattle (about 80 percent) out of the export market, unless he goes through the middleman who will benefit more. With beef, we have the world as our market, whereas with live cattle the only viable market is South Africa, who can drop prices if abattoirs are closed.
BG: Farmers are complaining of BMC monopoly. Is it a justifiable complaint?
Raborokgwe: No it is not justifiable because the monopoly has benefitted beef cattle farmers in Botswana. The current two export abattoirs are struggling to receive enough cattle to be viable, and economies of scale would not allow multiple competing entities to survive.
BG: During your time, was the BMC losing a lot of money through feedlots?
Raborokgwe: No it was not. The ultimate returns were more than costs. We improved CDM and throughput. So feedlots were an ideal method to improve the weight and quality of our beef.
BG: BMC has appointed a former Permanent Secretary in the Ministry of Minerals, Energy and water Resources to head the abattoir. Your views?
Raborokgwe: Dr. Akolang Tombale has a lot of administrative experience. He will nail issues of corporate governance. Dr. Tombale is an interim CEO, who is tasked with setting the BMC on the right path, I hope he will get the support of the board and the Ministry.
BG: BMC UK Holding is also on its knees, what is the problem?
Raborokgwe: BMC UK used to be profitable and was adding value to the BMC group. BMC initially used agents to sell beef to EU, but realised that the industry operates in a Mafia-like style. So BMC made a decision to sell its own beef. BMC was so successful in this that it also marketed and sold beef from Swaziland, Zimbabwe and Namibia. Closing down the London operation is a major setback for BMC.
BG: What do you think should be the way forward?
Raborokgwe: A commission of enquiry should be set up to get to the bottom of the cause of the problem. BMC has had four CEO’s in two years, so changing CEOs has not improved the situation. Other players at BMC are the board and the ministry. At BMC the buck stops with the minister.G

Last modified on Wednesday, 31 July 2013 16:24

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