16 June 2018

Lesotho to Open Auction Floors for Wool and Mohair

SIX cabinet subcommittee members are holding meetings with farmers throughout the country to discuss the new direction that the wool and mohair industry is now taking following the recent gazetting of new wool and mohair licencing regulations.

The government wants all wool and mohair to be auctioned in-country through a bidding system and to be globally recognised as originating from Lesotho.

For the past 44 years, the trade in Lesotho's wool and mohair was conducted in South Africa and Lesotho's only was deemed to be the country of origin.

The government now wants the business community interested in the trade to apply for licenses, which under the Agricultural Marketing (Wool and Mohair Regulations, 2018) are divided into three parts comprising licenses; prohibition of wool/mohair export at early marketing stages and penalties for offenses.

Licensing will be issued in six business categories of shearing sheds; brokers; wool and mohair testing; trading and auctioning; processing; and export.

This is aimed at preventing the monopoly that has existed in the sector for decades and resulted in Lesotho's failure to derive maximum benefits from its high-quality produce.

Not only has much of the foreign-based operations cost the country hundreds of jobs over the years, there are also concerns that Lesotho could have lost billions of maloti due to unfair trading practices and pricing; in addition to losing numerous business opportunities, including in the area of value addition before export.

Currently, the Ministers of Trade and Industry, Tefo Mapesela; Agriculture and Food Security, Mahala Molapo; Small Businesses, Chalane Phori; Development Planning, Tlohelang Aumane; and deputy ministers of Agriculture, Dr Nthabiseng Makoae and Home Affairs, Machesetsa Mofomobe; are in Mokhotlong where they are engaging with farmers. The Subcommittee has also engaged with other farmers in the districts of Maseru, Butha Buthe, Berea, Quthing, Mafeteng, Mohale's Hoek and Qacha's Nek.

In an interview yesterday the deputy minister of Home Affairs, Mr Mofomobe said a study conducted by the Lesotho Wool Centre under the supervision of the department of marketing in November 2017, played a major role in informing the new regulations.

"The centre piloted the direct marketing of the Lesotho wool to international markets and eight companies from China bid for the wool. Findings showed that of the 22 classes of wool, 17 fetched more money compared to what a South Africa-based trader got," Mr Mofomobe said.

He said this proved that marketing of wool directly to manufacturing companies skips a number of actors and stages such as transportation to Port Elizabeth in South Africa and value added tax paid at the border post, which then increases payments to the local farmers.

In 2016/17 the Lesotho National Wool and Mohair Growers Association's (LNWMGA) gross income was M351,623,930 and a total M53,663,205, was deducted to cover value added tax, BKB commission, insurance and handling fees and transport.

"The study helped us to understand the need for regulations and other mechanisms that will help us to improve the local processes for sustainable marketing of the wool and mohair to the international markets and within the local value chain. At the end of the day, this is about the farmer, who should benefit significantly to be able to produce more high-quality wool for the next selling season and ensure that the sector continues to grow."

He said the localisation of the wool and mohair marketing directly from Lesotho to international markets will improve the business environment, increase local beneficiation, enhance monitoring and evaluation of transactions and concentrate banking transactions in Lesotho.

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