FAQs
Imports directly compete with local produce since Botswana is a net importer of grains. Millers are free to import if imports are cheaper. BAMB is faced with a challenge because just like the producer and the food processor, it is exposed to market or price risks i.e. prices often collapse, while BAMB holds expensive stocks. The Act requires BAMB to set prices that are fair to both farmers and consumers, and this is a difficult task due to competing expectations.
BAMB is well established with storage capacity of over 100,000 metric tons (Mt) in three silo facilities and warehouses. With our network of fairly spread out 11 branches, BAMB ensures that produce is taken from areas of production to the consumer/market. For instance, sorghum is mostly produced in Pandamatenga while a large portion of its market is in the Southern part of the country. b. BAMB sells inputs such as fertilizer, high yielding seeds, agro chemicals and packaging materials to farmers. c. In order to increase stocks procured locally, BAMB has introduced contract farming. This contract assures BAMB of the product and assures the farmer of the price. It helps the farmer to plan ahead for the crops to plant, costs they are likely to incur and most importantly it helps them project whether they will make profit or not basing on the yields expected and the price offered.
BAMB producer prices are tied to market prices. Since local produce competes with imports, BAMB is forced to adopt parity pricing using the South African Futures Exchange (SAFEX) as a benchmark. There are instances where BAMB prices are higher than the market just to give an incentive to the producer. BAMB never offers farmers prices that are below the market price.
That is not true. BAMB buys bulk stocks which it normally sells at a later stage which could be a year or two after procurement. We deal with perishables; therefore we sell in a first in- first out basis. And there are times when during harvest season when farmers are bringing a new crop, BAMB would be selling the old crop that it had procured at higher prices than the prevailing market prices in the new season. E.g. BAMB bought sorghum at P85.00-P90.00/50kg last harvest season and the current buying price is P67.50/50kg. And the crop that is being sold to food processors is the one that was procured last season. And obviously we cannot sell this particular crop at P85.00 or P90.00; we add mark up to cover our transport, handling, insurance and other costs.
Botswana Agricultural Marketing Board (BAMB) was established by an Act of Parliament, No. 2 of 1974 mandated to provide a market for locally grown scheduled crops, whilst ensuring that adequate supplies exist for sale to customers at affordable prices. The Act also requires BAMB to cover its operating costs from revenue generated from its trading activities.
Powers of BAMB - conferred by the Act:
- Purchase or obtain supplies from any source
- Fix prices for purchase or sale of produce
- Import or export any scheduled produce
- Arrange for transport, storage, processing and sale of scheduled produce
- Enter into any transaction which, in the Board’s opinion, will facilitate proper discharge of its functions
BAMB encourages farmers to form marketing groups and nominate a representative to sign a contract on their behalf. Most people are quick to point out that Batswana have failed to form clusters and this will not work out. If they want to succeed and capitalize on opportunities availed to them, farmers should learn to cooperate. Moroto wa o esi ga o ele. If farmers cannot form groups, then individual farmers must commit to work hard and produce the minimum 35 bags/ha yield that research has shown is attainable in our climatic conditions. This yield is achievable as we have seen farmers who produce under the same climatic conditions that we often complain about produce 40 to 60 bags/ha. With 5ha of land that an average Motswana has, 200 bags and even more is achievable. But it will obviously require more commitment than we see happening in most fields where farmers still broadcast, are resistant to using hybrid seeds, do not fertilize and weed their fields.
Local producers that are able to produce 200 x 50kg bags of any of the crops listed under contract.
- Insulates farmers against adverse movements of market prices by offering them:
- 100% guarantee on the agreed minimum price
- Opportunity to capitalize on rising prices
- Helps farmers to prepare seasonal budgets and application for loan.
E.g. the contract price of sorghum was P1700/mt while the current BAMB buying price is P1350/mt against prevailing market price of P1150/mt. This scenario shows that a farmer that has signed contracts to sell to BAMB for the 2009/2010 season will benefit as the market prices have collapsed.
In instances where the market price exceeds the contract price, the farmer is offered the market price. E.g. contract price for Tswana cowpeas was P6400/mt and the current buying price is P7000/mt. We would not want to disadvantage a farmer who has signed contract; therefore we buy their produce at P7000. NB: 1metric tone is 20 x 50kg bags.