- Ready to meet its Norway beef quota
- Strategises for Growth amidst Quota Exploitation
- Targets P1.2 bn in beef sales revenue
BMC said it has more than enough to supply Botswana’s quota of beef exports to Norway under the purview of the SACU-EU Free trade agreement to, Norway, a top-tier European market.
Chief Operations Officer (COO) Brian Dioka said the abattoir anticipates an increase in throughput and plans to slaughter around 106,000 cattle in 2024, aiming for a revenue target of P1.2 billion.
It is from this slaughtered 106,000 cattle that the Commission will have enough to meet the Norwegian quota. Demonstrating the seriousness of BMC in meeting this quota, BMC said they already have utilised 40 percent of its quota. According to CFO Mmabasotho Tibe, the plan is to ship 800 tonnes between now and June.
“This means we should be able to complete our quota by June this year and start lining up for next year,” Tibe stated.
Currently, the Scandinavian nation is granted privileged access to 3,700 tonnes of beef from Botswana, Namibia, and Eswatini annually through the Norway quota, which was formed under the Southern African Customs Union (SACU)/Norway European Free Trade Association (EFTA) quota agreement.
Under the terms of the SACU/EFTA agreement, Botswana and Namibia share 3,200 tonnes equally, with the remainder going to Eswatini. Although beef exports to Norway and the European Union (EU) in general are a lucrative market for Botswana’s cattle industry, BMC had challenges meeting its 1,600-tonne quota to Norway in 2021 and 2022 due to a lack of supply to its abattoirs from local farms.
Dioka explained that for Botswana to fulfill its quota in Norway, BMC would need to slaughter 30,000 cattle in a year. However, in 2021, he acknowledged they fell far short of meeting this demand after slaughtering 19671 cattle.
While at the time Namibia took advantage of Botswana’s challenges, Dioka explained that to utilise the quota, Namibia needed to have sought permission to do so.
“What we have been seeing is unilateral usage of our quota without our concerns. It’s being dealt with at a diplomatic level.”
In 2022, when BMC was ready to fulfil its Norwegian quota, there was an outbreak of Foot-and-Mouth Disease (FMD). Botswana was unable to export, and traders also utilised Botswana’s quota without its consent.
“When we were cleared of FMD, they had utilised the quota. You cannot supply more because it’s a quota. If your share is used it cannot be increased.”
In 2022, BMC had slaughtered 36128 cattle. While the Commission slaughtered an impressive 66187 cattle in 2023, they faced another challenge of ‘cross-selling’.
Rogue European traders purchased BMC beef already sold into the EU market and smuggled it into Norway without the Commission’s knowledge. Traders were rerouting products to take advantage of the favorable pricing in Norway. According to Dioka, prices in the EU are 50 percent higher than in any other country. Prices in Norway are 50-60 percent higher than prices in the EU because it is a protected market. This is why they use a quota.
Traders were also exploiting their proximity to Norway, often selling products before BMC could utilise its quota.
BMC management has implemented a strategy to prevent cross-selling. This means that if BMC sells a product in one market, it cannot be resold in a different market. This measure is part of risk minimisation strategies, as stated by Dioka, aiming to ensure that lucrative segments within Europe identified by BMC are exclusively exploited by the organisation.
He acknowledged that in the first year of implementation, challenges are expected, which may include delays and decision-making processes.
“It delays a bit of selling. The customer also must agree that as they take the product they focus on where the product is sold. They can’t switch to another country. We want to make sure where we get premium prices, those markets are not exploited.” Meanwhile, BMC announced that the adoption of its “demand-driven selling” approach is expected to fetch over P1.2 billion in sales revenue in 2024. Under this strategy, BMC pre-sells beef before slaughtering.
“We produce knowing who is buying,” Dioka said. “We are a niche producer, so we don’t look at the number but the quality.”
In 2024, BMC expects to surpass its pre-COVID sales. The highest-ever sales revenue recorded by BMC was in 2010. At the time the Botswana Meat Commission achieved a milestone by surpassing a turnover of a billion pula for the first time, slaughtering 179,000 cattle. By 2015, despite slaughtering fewer cattle (149,000), the organisation exceeded its previous revenue record, reaching P1.2 billion.
“We were slaughtering a lesser(sic) number but achieving more millions because of sales strategy,” Dioka said.
In 2021, BMC generated revenue of P191 million, followed by P365 million in 2022, and P625 million in 2023.
“We are going back to pre-COVID levels because before 2019, revenue was about P800 million. You can see that we are going back there. There is clarity and certainty. What was surprising is there was no live cattle exports,” he said.
