Joel Konopo
15 September 2006
The Botswana Agricultural Marketing Board (BAMB) had a difficult year due to stiff competition from South Africa, according to the company's annual report.
In the report, the Chief Executive Officer, Masego Mphathi said revenue recorded a minimal increase from P39,335.799 to just over P40 million as recorded in the previous year, representing two percent. This was due to cheaper import grains from South Africa.
The gross profit margin declined from 16.4 percent, recorded in the previous year, to 11.7 percent in 2006. Mphathi noted that this sluggish growth was mainly attributed to competition with imports from South Africa. "This is because producers choose to sell produce directly to millers," lamented Mphathi.
In an otherwise difficult year, the CEO reported a "crush" in the price of grain due to high production in the previous year, which exceeded demand. "Large stocks of carry over grains from 2004 compounded the problem of excess grain."
Mphathi said sorghum prices dropped from an average of P966 per metric tonne in 2004 to P400 per metric tonne of sorghum harvested in Pandamatenga in 2005. "But producers decided to sell directly to millers with whom they were able to negotiate better prices," said Mphathi. The crush in market prices during the year under review meant that BAMB business faced very stiff competition with the new crops which farmers were selling at between P750 and P1,000 per metric tonne as well as cheaper imports. Mphathi revealed that sales of sorghum were improved after government imposed restrictions on imports. He said sunflower, which has a limited market locally was exported at ruling market prices which were at that time below the cost price. "These stocks had to be sold at a loss to avoid excess storage costs," said Mphathi.
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