MASERU – THE government might find it tough to break the bond between wool farmers and BKB, the South African company that has been acting as the broker for Lesotho’s wool for decades.
It’s a relationship built over 44 years through which it has withstood animosity, misunderstanding, disputes, droughts and animal disease outbreaks.
Along the way the 37 000 farmers have become so dependent on their relationship with BKB that they see no other alternative.
They have received loans from BKB to improve their breeds and increase their herds.
Some associations have received loans to build offices, shearing sheds and trucks.
During drought periods BKB has helped farmers with animal feed and medicines.
In exchange, local farmers have loyally delivered their wool and mohair to BKB’s auction floors in Port Elizabeth.
Local farmers now own five percent of BKB.
So when government say they can no longer sell their wool and mohair to BKB most farmers view it as ‘sabotage’ of a company that has assisted them for years and in which they have a stake.
In 2016/2017 Lesotho faced a severe drought but farmers were cushioned with a M2 million facility from BKB that supplied them with animal feed.
As a result, the quality of the clip improved a lot leading to an increase in mass, quality as well as revenue received by farmers. Despite the drought that year local farmers produced 3 854 940 kgs compared to 3 637 915.00 kg in 2015.
Farmers received M316 million up from M280 million the previous year. Although production dropped by 103 875 kgs in 2017/2018 revenue increased to M382 million.
BKB has been there when farmers have been struggling to get access to finance as commercial banks did not consider livestock as collateral due to the high risk of them getting stolen or dying.
Through these loans farmers have been able to build offices, buy trucks, wool packs, mohair packs, rams, and upgrade their shearing studs.
In March 2017 the Mateanong stud with its then chairman Tefo Mapesela, currently Trade Minister, asked BKB to assist them by buying 40 rams to the tune of M178 000, which was paid by deducting five percent of every loti from the wool sales of every farmer.
Ironically, Mapesela is now at the forefront of the battle between the government and the farmers. In the past five years, BKB has loaned over M26 million to farmers who pay back with proceeds from their wool and mohair. This year farmers owe BKB M11 million which they were supposed to repay after the auctions in South Africa.
But farmers have not been able to make a payment this year as they have not been able to sell due to the new Agricultural Marketing Regulations 2018 that prohibit the export of wool and mohair.
But BKB is not calling its debt yet.
“We pride ourselves in integrity and the well-being of farmers hence we ensure that we assist farmers by all means to achieve their goals because when they conquer we also win,” Isak Staats, BKB General Manager, said. Staats said the company’s relationship with Basotho farmers has been mutually beneficial.
“Farmers always seek clarity where needed and we have always opened our doors and provided it because respect, integrity and honesty are the basis of this relationship,” Staats said.
In 2005 farmers through the Lesotho National Wool and Mohair Growers Association (LNWMGA) bought a five percent stake in BKB through an interest-free loan from BKB, which they settled in 2006 and farmers started getting their dividends in 2005.
In 2016 farmers received just over M1.1 million and a little over M1.2 million in 2017 in dividends. Each farmer got a share of the dividend.
“The dividends are calculated on a pro rata basis. Meaning every producer gets a share of the dividend based on the value of wool and mohair they sent,” Staats said.
This year this relationship has been threatened by the introduction of the new regulations that came with a barrage of allegations about BKB. The regulations banned the exportation of wool and mohair except through Maseru Dawning, another broker competing with BKB.
In January, BKB was served with a court order alleging that the company was involved in money laundering and financing terrorism which led to the BKB Standard Lesotho Bank account being frozen and consequently late payments to farmers.
However, after challenging these allegations the courts ruled in favour of BKB and the account was reopened. BKB was also accused of evasion of tax and was assessed by the tax authorities in Lesotho and Staats said they “sought advice from our Auditors and sent letters to the Lesotho Revenue Authority through our Lesotho Attorneys but to date a response is awaiting”.
Jacobus A le Roux, General Manager for Corporate Marketing and Public Relations at the BKB said they made a follow-up letter to the LRA but to date there is no response.
The company was also accused of cheating farmers by paying them “peanuts” for their wool and mohair as well as making a lot of deductions from the farmers’ sales revenue.
BKB stated that the wool and mohair prices are determined by the international demand and supply, and in the company’s interest as well to get the highest possible prices hence they held auctions for the sale of wool and mohair.
Mokoenihi Thinyane, chairman of the LNWMGA, told thepost that they are not against the government but they “oppose a law that prohibits a fair trade”.
“The government has to understand that we have shares in BKB, meaning it is no longer a mere broker to us but our business partner,” Thinyane said.
“It is not easy for us to just say we no longer want BKB and we jump to another broker. We have financial interests in the BKB,” he said.
“Our relationship was built over tens of years and we have so much in common and our interests are the same.”
Thinyane said the government should look beyond party politics when it deals with issues of wool and mohair because “farmers are in all parties, both the ruling and the opposition”.
“The wool and mohair benefits were championed by the late Prime Minister Leabua Jonathan who in his wisdom saw that Basotho were not benefiting,” Thinyane said.
“His vision was that every Mosotho who has sheep and goats should be able to get enough money for his family,” he said, adding: “BKB came into the picture and we embraced it because it came speaking the language we understood, the language we still understand.”
Lemohang Rakotsoane