Derek Brink’s Senn foods is set to expand significantly encroaching into some of Botswana Meat Commission’s (BMC) safe zones such as cannery, creating hundreds of jobs in the process. Although the BMC monopoly denies Senn Foods an opportunity to export beef, the 35 year old business seeks to expand into cannery and biltong production for open markets.
According to the Botswana Trade and Investment Centre (BTIC) website, Senn Floods is explained as a privately owned domestic company that began its operations in 1982. The company currently has 480 employees. The company is into wholesome foods and their products are processed meat and beef. With the current expansion, Senn Foods is expected to hire an extra 200 to bolster the work force and has recruited some experienced former BMC employees for its cannery division. BMC recently retrenched and Senn Foods pounced.
This publication gathers that with the erection of a new bigger factory, Senn Foods which currently exports processed meat only, is on a mission to ready itself for the possible liberalisation of the beef market. Parliament has been procrastinating over the BMC monopoly Bill for the past five years. The bill is currently under deferred status. It seeks to abolish the BMC monopoly in the exportation of live cattle and beef. â€¨
The law was last discussed in Parliament when Christian De Graaf was still minister of Agriculture.
Because of the BMC monopoly, Senn Foods is not allowed to export beef. In the past they have explained that they are not exporting chicken because local prices are very hire. A senior employee at Senn Foods indicated that the company’s expansion plans are moving at a very fast pace in anticipation of a liberalised beef market, which could potentially triple the company’s earnings.
WeekendPost has further established that Senn Foods has potential customers inquiring from as far as Hong Kong, China and other Asian countries on the possibility of importing beef from Botswana. The SADC region, especially Angola and the DRC are also interested. The main impediment remains licencing because BMC is protected from competition. However, what frustrates businesspeople like Brink and others is the fact that BMC seems to shun other markets and is only interested in exporting to the European Union. Attempts by Senn Foods to apply for licences to export meat other than beef are said to have been turned down on a number of occasions.
Senn Foods already operates an abattoir which has also been revamped and increased in size. The abattoir slaughters cattle, goats, sheep, game and a host of other animals for the local market.
The considered expansion, it is said, also took into consideration the possible liberalisation of the beef market and possibly other meat for export.
SENN FOODS THE EMPIRE
Derek Brink, as part of the plans to spread Senn Foods in Africa, sold 49 percent in Botswana’s biggest cold chain distribution firm, Senn Foods Logistics, for R79.9 million ($7,7m) to RCL Foods in 2014.
RCL Foods also used the acquisition in keeping with its plans to grow its presence in Africa, which is projected to experience unprecedented economic growth in the next decade. “(Through this acquisition RCL and Vector will) offer world class logistics and sales solutions to existing and future partners in these countries,” RCL said in a statement.
Through these partnerships, Senn Foods intends to ease transportation of its goods through Africa now and in future. “Senn Foods has a lot of potential, it could employ more people, if the beef market is liberalised,” quizzed one of the company executives.
Senn Foods Logistics is involved in the distribution of dry, frozen and chilled foodstuffs. The firm currently represents almost all of Vector’s principals in Botswana, which includes Rainbow, McCain, I&J, Fry’s and QSR customers, Chicken Licken, Nando’s, Spur and Wimpy.
Senn Foods has in the past also acquired 100% issued share capital in Seafood Wholesale Botswana and in exchange, Seafood Wholesale Botswana getting 43% of issued share capital in Senn Foods. Seafood Wholesale is a distributor of chilled and frozen products including Senn Foods processed meats and dry goods.
THROW BACK – THE MONOPOLY DEBATE
Those who support the liberalisation of the beef market are of the view that if the BMC monopoly ceases, farmers would be able to sell as individuals or syndicates to whoever they choose. At the moment they are confined to selling to the BMC because of the monopolistic BMC Act. Farmers are interested in the Angola and Zimbabwe markets because they believe the BMC has neglected those.
The anti-BMC rally is also of the view that the EU sometimes makes it difficult for Botswana to sell her beef because of stringent standards. They stress that there need to address quality first and further note that if the government were to open up the beef market, it would be a free for all. They point out that only commercial farmers would benefit from the new arrangement. He argued that Batswana farmers, who do not have ranches, would be unable to develop their breed. But those against liberalisation are of the view that before Botswana opens up the market there is need to develop the local breed first.
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.