Mahala speaks on wool and mohair saga
Bereng Mpaki/Mohalenyane Phakela
AGRICULTURE minister Mahala Molapo has defended the controversial wool and mohair regulations.
Mr Molapo said the regulations are aimed at plugging the loopholes in the trade of wool and mohair sector which resulted in the government and farmers losing millions of maloti per annum when selling their product from South African auction floors.
He further said that the regulations which called for the opening of local auction floors would ensure that the government and farmers know the exact value of their product when it is sold to international manufacturers.
“When we came to power last year we found that the sector was largely unregulated with no controls on how different players within the sector should conduct their operations from local brokers to those outside the country,” Mr Molapo said.
“So, the government took a conscious decision to strengthen the regulations so we will be able to directly sell the wool and mohair to the international consumers.”
For the past 40 years, Basotho farmers have been selling their fabric from South Africa through brokers BKB until the promulgation of the new Wool and Mohair Regulations of 2018.
Mr Molapo was responsible for drawing up the Agricultural Marketing (Wool and Mohair Licensing) Regulations 2018 which were gazetted on 4 May 2018. The regulations forbid anyone to trade in wool and mohair without a license obtained from Ministry of Small Business, Cooperatives and Marketing and that all the transactions should be done from Lesotho.
Mr Molapo said that having the product sold from Lesotho would boost the foreign currency reserves as the international buyers paid for the products in United States dollars.
He further said as things stood, the foreign exchange benefits accrued to the South African economy instead of Lesotho.
“Lesotho fabric is exported to international markets such as India, Australia, Italy and China. So, the broker who sells it on behalf of the farmers is paid in US dollars. The broker then takes the US dollars to the South African Reserve Bank and this means the foreign currency from overseas remains in the South African economy with Lesotho only receiving what the broker gives to the farmers after deducting all their expenses.”
Mr Molapo said selling the wool and mohair from Lesotho would also give this country international recognition as currently, it was presumed that South Africa was the country of origin for the product.
He further said that by selling its wool and mohair from South Africa, Lesotho was missing out on benefitting from duty-free and other exemptions extended to least developed countries.
“Lesotho is one of the least developed countries whose products are given tax exemptions on the international market but then a payslip of a local farmer who has taken his wool or mohair to be brokered in South Africa shows several deductions which cannot be explained.
“These deductions which are done without the consent of the farmers include Value Added Tax (VAT), dipping levy and cost of bales. I am a farmer and last year I exported fabric worth M15 000 to South Africa. My total deductions amounted to M3500.”
Mr Molapo also took a swipe at the opposition and some farmers for allegedly politicising of the wool and mohair issue.
“The government is trying to get rid of all these unnecessary expenses incurred by farmers but some of them are resisting. We believe this is because they have something to gain from the brokers at the expense of the rest of the unsuspecting farmers.
“The opposition is trying to appear as if it sympathises with the farmers but the truth is that they just do not want to see things improve because they are not in power,” Mr Molapo said.
In June this year, an inter-ministerial committee comprising of ministers Chalane Phori (Small Business) Tefo Mapesela (Trade and Industry) and Mr Molapo were tasked by the government to resolve the disputes that emanated from the new regulations.
The regulations were amended early this month and according to Mr Molapo, this was done after the realisation that the May 2018 regulations were silent on cooperatives or associations which farmers operated under.
“Again, we had to stipulate how the brokers would operate as well as the payment methods.
“The issue of selling wool and mohair from Lesotho was tested last year at the Wool and Mohair Centre in Thaba Bosiu where 800 bales were sold and it proved to be a success. On top of that, there are also two machines for cleaning wool and mohair which were bought from India in 2014 which remain unused. The plan was that they would be used in Thaba Bosiu so that the fabric could either be sold in its raw state or in its clean one.”
Mr Molapo said that all they wanted as government was to be given a chance to boost the country’s economy through its resources.
“We have not failed but the farmers who seem to have something to gain from the South African brokers as well as the opposition are complaining when they should be giving us a chance to grow the country’s economy.
“We have nothing against the South African brokers and they are free to come and operate from Lesotho like other retail outlets so that they can employ Basotho.
“Every year, the government invests so much money in the wool and mohair industry through shearing sheds where it also employs people who work there. But then, it asks for nothing in return. All we want is to ensure that the country’s resources are fully exploited to boost our economy,” he said.