MASERU – Chaotic enforcement of new regulations on the sale of wool and mohair could cripple the local industry and leave producers out of pocket, a group of international buyers has warned. The South African Wool and Mohair Buyers’ Association (SAWAMBA) said government should approach the contentious matter soberly and engage all stakeholders with a view to finding a durable solution to the issue that has set government on a collision course with farmers.
SAWAMBA, which represents buyers interested in purchasing and using wool and mohair from South Africa and Lesotho, wrote to the Government Secretary (GS) Moahloli Mphaka in July warning against setting up of a wool and mohair marketing and sale centre in the country. “Fragmenting the selling of wool and mohair (as has been proposed in Lesotho) would only result in higher costs and therefore lower net returns for growers,” R.A Kirsten, chairman of the SAWAMBA wrote in a letter dated July 4, a copy of which Public Eye has seen.
“Given the scarcity of specialist wool and mohair buying skills combined with the existing programme of regular auctions in South Africa, it is highly unlikely that all (or even any) SAWAMBA buyers would be able to attend a duplicate auction system in Lesotho,” reads the letter.
However, the new regulations which state that no one will be allowed to trade in wool and mohair without a licence from the Ministry of Small Business, Cooperatives and Marketing, were adopted by parliament on Tuesday this week amid strong protests from farmers. The regulations further state that the holder of an export license “shall not export wool and mohair unless it is prepared, brokered, traded and auctioned in Lesotho”.
Local wool and mohair growers under the banner of the Lesotho National Wool and Mohair Growers Association (LNWMGA) are opposed to the regulations which they say are meant to favour an Australian-Chinese company which has opened a wool and mohair centre in Thaba Bosiu. The farmers on Monday gave Prime Minister Thomas Thabane an ultimatum to intervene in the dispute or face unspecified action.
In their letter, the South African wool and mohair buyers indicated that they were open to engage with any party to discuss any concerns there may be around the current (before adoption of the new regulations) marketing of Lesotho wool and mohair. “However, we urge all decision-makers to consider the welfare of the wool and mohair growers of Lesotho before taking final decisions that affect the selling of Lesotho wool and mohair,” the letter reads.
The South African buyers also submitted that there was “currently no more practical nor efficient alternative to the orderly marketing of Lesotho wool and mohair” than that offered in partnership with SAWAMBA at The Exchange in Port Elizabeth. They said: “As a result, we strongly encourage that the status quo is maintained until robust consultations and debate with all interested and affected parties surrounding alternative methods are exhausted.
“The final objective must be to obtain the best possible price and returns for the more than 50,000 small stock wool and mohair growers in Lesotho and to ensure the stability and longevity of the wool and mohair industry in that country.” The regulations were initially tabled in parliament by agriculture minister Mahala Molapo on May 4 this year triggering court action by wool and mohair farmers who said the regulations would harm their business.
In June, the farmers won a High Court interim order blocking the government from effecting the regulations. The order instructed government to halt the implementation of the regulations pending finalisation of a case filed by the farmers in which they argued that auctioning of wool and mohair had to be undertaken under well-prepared auction floors and well-organised buyers for effective competition.
“We are not aware of the presence of this infrastructure to effectively handle Lesotho clip for this important activity,” the farmers said their court papers. On September 3, Molapo withdrew the regulations from parliament. The following day, on September 4, small business minister Chalane Phori re-instated the withdrawn regulations, sparking confusion among farmers and opposition parties.
On Tuesday this week 53 Members of Parliament (MPs) on the government side voted for the adoption of the regulations while 46 MPs from the opposition voted against the regulations’ adoption. A total 21 legislators were absent from parliament. In their July letter, the South African buyers indicated that for Lesotho wool and mohair to be globally competitive, it was essential that international buyers be presented with a reliable and orderly system that “facilitates the change of ownership of wool and mohair”.
To facilitate this process for South African wool and mohair, SAWAMBA said it rented premises known as The Exchange in Port Elizabeth, and for many years has offered the same possibility to the growers of wool and mohair from Lesotho. Their letter read: “That offer remains open today. The Exchange is recognised and trusted by the international wool and mohair community as a reliable facilitator of the change of ownership.
“The system of open cry auctions operated at The Exchange ensures the best possible competition and, by implication, results in the growers obtaining the best possible price for their wool and mohair.” Meanwhile, the motion by some members of the Economic and Development Cluster Portfolio Committee of Parliament to challenge legal notice of agricultural marketing (wool and mohair licencing) regulation of 2018 flopped this week.
According to Serialong Qoo, MP for the Malingoaneng constituency, the dissenters completely distanced themselves from the wool and mohair licencing regulations because they believe it was fraught with irregularities. Qoo notes that the motion presented by Semano Sekatle MP for the Lebakeng Constituency, shows that the regulations do not provide for a transitional period.
According to him, in Lesotho it is the norm to provide a transitional period in the drafting of Bills and Regulations, showing that failure to do so may result in undesirable disruption and destruction of business. He said a lot of Basotho are already in the business of trading in wool and mohair - be it as owners of wool and mohair, brokers, transporters and exporters and any disruption would not only affect them negatively as individuals but the economy at large.
He also stated that the ministry was in contempt of court, and used recent court judgments to demonstrate that the minister of agriculture has consistently and deliberately ignored court orders and decisions. For instance, in Lesotho National Wool and Mohair Growers Association versus Minister of Agriculture and Food Security, the association has asked the court to nullify the regulation that prohibits the export of wool and mohair.
On June 18, he added, Justice Molefi Makara ordered government to allow growers to export wool and mohair. “In that regard, the respondents were ordered to release to the possession of the applicant, the necessary permits such as veterinary services, bailing, transport forms, temporary receipts and stock sheets for each shipment of wool and mohair the applicant intends to export pending finalisation of the application,” he also said.
According to Qoo, ever since the order was issued, agriculture minister Mahala Molapo has not allowed any export of wool and mohair. In another matter, the Association approached the courts of law again, this time suing the director of livestock who is responsible for issuing permits and won. Qoo said Lesotho is not ready to restrict the export of wool and mohair.
According to Qoo, a fully operational wool and mohair facility comprises of greasy wool and mohair warehouse, wool and mohair grading factory, pre-sale sample store, wool and mohair bailing factory, a wool and mohair transportation centre and office building, but to date the existing structure in Thaba-Bosiu has only the greasy wool and mohair warehouse fitted with only two wool compressors while the rest are yet to be constructed.
Opposition MPs have also raised procedural technicalities in the presentation of the regulations in parliament, calling for their nullification to that effect. PFD’s proportional representation MP Thabang Kholumo said the regulations in question were passed even though the passage timeframe had expired. Kholumo said there was a motion challenging their presentation, which the deputy Speaker had ignored and instead overlooked parliamentary Standing Orders, opting for referral to the procedures in the House of Commons in the United Kingdom.
He said the opposition was not going to let go and would challenge the decision by the deputy Speaker in the courts of law. Phori said the effective wool and mohair regulation is almost the same as the first one but has new clauses that were absent from the first one. He added the present regulation specifies the amount of commission a broker will get for selling wool and mohair - four percent.
“It also notes that the person who has a safe place for storing wool and mohair should apply for the licence for the place to be reviewed before use,” he said. According to him, the regulation also stipulates that licences for scouring, processing, trading and auctioning of wool and mohair are reserved for Basotho, adding that farmers are given the right to decide how much the broker should deduct from their earnings.
Phori said studies show that a lot of benefits can be drawn from this neglected sector, though warning that a lot of dirt and lack of transparency surrounds wool and mohair deals. The studies he said also show that at full operation and capacity Lesotho’s wool and mohair sector can create up to 2 000 sustainable jobs with more jobs from subsidiary operations as well as the chain supply.
According to Phori, for the more than 44 years that Basotho wool and mohair farmers have been represented by the middleman in their produce trade, the country has lost millions of Maloti that cannot easily be accounted for. “Here we are talking of huge sums of money. I have learnt that of the M800 million that Lesotho production makes from the markets, only M300 million to M400 million is actually accounted for in Lesotho and the rest is lost to South Africa,” he said.
He added that over the years, Basotho farmers have been charged taxes on their trade returns but the agents in the trade have not remitted a single penny to the country. Phori said these discrepancies have to be followed up to the very end to bring trade justice to Basotho: “What the government of Lesotho wants is to see the sector open and trade deals being transparent. We are aware there are people who have been benefiting personally from these deals and we need to get rid of that and make sure that each and every participating farmer gets their fair benefits,” he said.
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