by Anonymous
I refer to your article titled 'CEDA faces Bankruptcy' (over poor loan repayments from small business and high operating costs) in your Tuesday 23rd October edition.
I am a beneficiary of CEDA (Citizen Entrepreneurial Development Agency) funding for an agricultural project and will begin servicing my loan with the first installment due at the end of November. I want to confirm the CEDA Chairman and CEO's remarks regarding the problems faced by SMEs regarding market penetration and other related problems as they have a knock on effective on CEDA beneficiaries' ability to service their loan obligations.
I am a fresh produce grower and I want to give you my experiences ...regarding the problems that emerging Batswana farmers face...
Most of the marketing problems encountered by Batswana can be laid at the doorstep of the major chain stores that operate in Botswana. Their actions and attitudes frustrate the efforts of government and Batswana farmers to wean off our over-reliance on South African produce.
...let me cite the example of tomatoes and green peppers to illustrate the untold story of the long-suffering farmer. I want to illustrate the tricks that the major chains use to justify buying from across the border (South Africa.)
The first problem encountered by a farmer is to get onto the 'list of suppliers' to the supermarket chain. This can be intimidating for the small farmer because you are told to contact 'head office'.
They may say that they cannot buy from you because you are a small farmer and are not VAT registered so they cannot claim back their VAT. This is a prelude to bring your prices down by 10 percent to cover their 'loss' on being unable to claim back VAT. This can be a legitimate excuse but in final analysis the loss is borne by the farmer. This is an area that the government needs to look at seriously.
Once you have been successful in doing this, the next hurdle is to talk to the manager of the fruit and vegetable department. The manager in most instances is a young man who has no clue of business and his own critical role as a Motswana to support the development and growth of Batswana farmers. He is usually a glorified 'manager' with very little authority. He acts as a convenient buffer between the store manager and the farmer because in all cases he reports back to the boss and the final decision rests with the store manager.
The first thing he will ask you for is the price of your produce and when you give him a quote he has been primed to automatically say 'you are too expensive and I can buy/ source this cheaper from South Africa.' You can try to reason with him that they still have to pay for transport, clearing charges and that your quality is far superior to some of the second grade produce they source from RSA markets. Also the fact that the produce from RSA is already days old before it even gets to the consumer, whereas your product is freshly picked and in addition they do not have to keep large stocks because they can buy from you on a daily basis. Forget it, this does not wash.
Eventually you are forced to reduce the price, but when you ask them if it is fair that immediately after they buy your product they price it on their shelves at (up to double the price paid the producer), they have no answer. You can see who is ripping off the public by making huge profits from our sweat and toil.
I must admit I bristle with pride when my Botswana grown and produced cucumbers or tomatoes are placed on the shelves and labelled as 'English tomatoes/ cucumbers.' It gives them that certain air of snob appeal and respectability, but let's not be fooled: that's the supermarkets excuse for selling them at a higher price!
For both green and red peppers, they refuse to pay more than Pula 5.50 ($1.00)per kilo but they immediately put my product on the shelves at P15.95 per kilo for green peppers and red peppers for up to P25.95 per kilo. Ouch.
It is an interesting fact that farmers in South Africa have worked out that basic farm producer prices have not increased in the past 10 years, yet the farmers input costs have gone up by 200 percent and the chain stores are quick to blame inflation for rising prices on their shelves!
Okay, so once you start supplying them, don't get too happy because one day they will buy, say 200 kgs, and nothing the next day, because their truck will have brought stocks from RSA and those products are on the shelves next to yours. They will dodge coming to a regular supply agreement with you despite inviting them to your farm to see proof that you have consistency of supplies for a medium to long-term commitment.
In some instances when you deliver, the fruit and vegetable 'manager' or his children are hungry and his hunger pangs need Chicken Licken or Nando's. You read what you want to into that, I will not elaborate.
The next below the belt shot is when next you bring supplies, they want to return your produce that you previously supplied to them two or three days before. They want you to exchange it for them because they only sell 'fresh' products. They will not admit to the truth that they did not refrigerate the produce as is the normal practice, hence the deterioration in quality. When you enquire if they are allowed to send back products that they buy directly from the market in South Africa, they cut you short with the threat that if you do not accept returns they will not buy from you in future.
So now you have a truck full of perishable produce waiting outside that you have to dispose of, you are being forced to take returns and you are completely at their mercy. So what do you do?
After all that, you think you are on a roll and have a regular market. Then comes another hurdle. It can take anything from 30 to 90 days to get your cheque out of them. Since you are a small farmer with a hand to mouth existence and your profit margin has been cut to threads by the power of the supermarkets, this plays havoc with your cash flow and many farmers fall into hard times because of this. So how do we survive, let alone develop to pay our debts to CEDA?
...they make a mockery of and undermine the government's efforts to encourage the expansion of the horticultural sector. Maybe it's just a hangover of the old South African mentality, because many of the chains stores franchise holders are from there. On the other hand, it is also embarrassing that the largest importer of vegetables to Botswana is a citizen-owned chain with outlets countrywide, yet they will offer you peanuts, quoting prices ruling at the Pretoria Fresh Produce Market.
I have been on many occasions to the Pretoria Vegetable Market and have seen their big trucks being loaded with fresh produce that could otherwise be obtained in Botswana. If only they committed themselves to offer fairer prices and bought a larger percentage of local produce they could change the situation overnight.
This is but a small part of the suffering of the horticultural producer in Botswana. As things stand, there will never be a viable horticultural sector in Botswana because of the very negative attitude of the chain store buyers.
We have been forced to keep quiet because we fear being black listed by these chain stores so we live in an uneasy love-hate relationship with them.
I would like to see if any of the major chain stores could respond to this letter to deny what I have written herein. It is only then that I will expose my name. But at that time I will do so by quoting the names of the supermarkets, citing individual cases and occasions where I have encountered the type of problems I have listed above.
In the meantime, I request that my name and address be withheld for fear of being sidelined and suitably 'punished' for my exposure of this state of affairs.
Mmegi-Botswana
