22 Jul 2014

The Assistant Minister of Agriculture Mr Oreeditse Molebatsi says he is not aware of any bank that has failed to refuse to honour cheques issued by the Botswana Meat Commission (BMC) to cattle suppliers and transporters.


Answering a question in Parliament from the MP for Kanye North Mr Kentse Rammidi, Minister Molebatsi however said what he is aware that between June 30, 2014 and July 4, 2014, BMC under estimated the cash requirements to pay the influx of cattle bought through the Direct Cattle Purchase (DCP) programme after the resumption of cattle procurement of June 23 following its temporary suspension for three weeks.

He said during this period of June 20, 2014 to July 11, 2014, BMC bought cattle through the DCP for a total value of P17 million, and made other commitments including transport costs which together totaled  to P25 million.


Minister Molebatsi said because much of the BMC sales are outside the Botswana, the problem arose because BMC under estimated the impact of the bank holiday of July 1, 2014 on the foreign currency transfer and remittance. 


The influx of cattle especially from communal farmers compelled BMC field officers to continue buying and issuing notices for payment which were to be honoured in three days after delivery of the cattle. 


As a result no foreign currency transaction on July 1, 2014, Minister Molebatsi said  “ this created a serious cash flow problem resulting in some cheques and notices issued during that week not being honoured because of insufficient cash availability. “


He said out of the P25 million required in the said period, P2 181,071.50 could not be honoured with a total of  P897 803,20 arising from Lobatse, and P1 283 268.30 from Francistown.


The BMC has put measures in place to ensure that the unfortunate and isolated incident does not happen again. 
 He said these measures are that the BMC has negotiated with Bankers for facilities that will assist with the payment of farmers and ease the cash flow problems of the BMC.

In addition Mr Molebatsi said BMC has extended the payment period of the voucher from three days to seven days after consultation with farmers. 
Minister Molebatsi said “ BMC has come a long way this past year adding that for only the second time in its history last year, the abattoir achieved a turnover of over P1 million.”


It also achieved its target of breakeven from a loss of close to P300 million in 2012 and that it has also consistently honoured its loans from private institutions. 


He said the abattoir has been rated “A” grade facility by the British Retail Consortium (BRC) for two consecutive years 2013 and 2014 and that it was recently awarded a Technology, Innovative and Quality award by the Association of Management Consulting of France. 


He said although it is required to pay farmers within  48 hours of cattle delivery, BMC only receives cash from the sale of the meat after about six months from the time of procurement of cattle.

Currently, he said  BMC has up to P156 million in meat stock in its plants; P17 million stock on transit to EU; P27 million sales still to be paid for meat supplied to local customers; P42 million EU customers, as well as P162 million being cattle standing in feedlots numbering 27 090, and P19 million being cattle in holding farms.


“That gives MBC a total current assets of P451 million against current liability of around P10 million which mostly are other suppliers as trade creditors are paid cash,” he said.


MP Rammidi had asked if the Minister was aware that some Banks do not honour cheques issued by the BMC to cattle suppliers and transporters; if so; why.


He had also wanted the minister to state the total value of cheques that have been rejected or cannot be cashed; and what BMC is doing to rectify the situation.
 ENDS