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Dairy board faces chop

Caswell Tlali

MASERU — Agriculture Minister Ralechate ’Mokose is planning to disband the Lesotho National Dairy Board (LNDB) which has been in power for the past 20 years, the Sunday Express can reveal.

The move comes after dairy farmers’ associations complained that the LNDB was pushing them out of business to make way for foreign firms.

’Mokose has since called on the dairy farmers associations to nominate five people for an appointment to the board to replace the incumbent members.

’Mokose told the Sunday Express yesterday that when he was appointed minister of agriculture last year he was immediately alerted to the longstanding grievances of the dairy farmers.

“This case is not to be taken for granted because it touches the fundamentals of the dairy industry, which I believe has employed many Basotho,” ’Mokose said.

“I had to use my powers enshrined in the law to appoint new board members but since I did not know who is who in this industry I called on the dairy farmers associations to give me five people who will replace the current board,” he said.

For the past two decades dairy farmers and the LNDB have been at each other’s throat. The farmers say the LNBD makes it easy for foreign companies while making it hard for local dairy farmers to break into the industry.

The farmers also accuse the LNDB of hijacking the Lesotho Dairy Products (LDP), a public company established by the government with the help of the Canadian International Development Agency (CIDA) in 1987.

The LDP is a company that processes and packages milk from local dairy farmers.

It was supposed to be controlled by dairy associations but over the years it had been headed by the same people who sit on the LNDB board.

The result, the farmers say, is that the same people who regulate the industry by virtue of their positions as LNDB directors also run the LDP, a company they regulate.

An investigation carried out in 2009 revealed that the LNBD breached corporate governance principles when it became a shareholder in LDP.

The LDP is a company which is supposed to get a permit from the LNDB to process milk.

The farmers complain that the LNDB hindered some of them from entering the milk processing business because they would be potential competitors of the LDP.

Dairy farmers’ associations have on several times complained to the government that the LNDB was protecting the LDP’s monopoly by frustrating small-scale farmers.

The LNDB, whose mandate is to regulate the dairy industry, is also accused of lowering the price of milk to below the production costs so that Lesotho relies on imported milk from which it gets a levy.

The chairperson for the working committee of the National Dairy Farmers Forum, established in September last year to deal with the problem, Ts’eliso Ts’enolo, told the Sunday Express on Friday that many farmers had abandoned the business believing that the war between them and the LNDB could not be won.

“Ministers who were assigned to head the ministry of agriculture seemed uninterested in our case,” Ts’enolo said.

“The fact that the government was slow in dealing with this issue demoralised many dairy farmers and they left the industry,” he said.

“Others sold their dairy cows while others slaughtered them.”    

But now that there will be a new board Ts’enolo is hopeful that the problems will be sorted.

In 2009 Finance Minister Timothy Thahane hired a South African firm to investigate the problems in the dairy sector.

Gobodo Forensic and Investigative Accounting (Pty) Ltd issued a damning report last February alleging that the LNDB and LDP were mismanaged.

“There are allegations that the amount of levies collected was understated by the LNDB and that the LNDB could be abusing the levies collected,” the report said.

The forensic investigators said it was wrong that the LNDB was a shareholder in the LDP because of possible issue of conflict of interest.

“The perceived conflict of interest of the LNDB vis-à-vis the LDP resulted in the LNDB’s failure, in our view, to take the normal business steps to recover this debtor (LDP), namely the institution of legal action or finally applying for the LDP’s liquidation.”

“We conclude that the LDP views the LNDB as its financial custodian, as on request the LNDB supplied the LDP with financial assistance on more than one occasion.”

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