Casting away chains of poverty

MASERU – FOR decades, Basotho farmers were dependent on a South African wool and mohair brokers’ cooperative society, Boeremakelaars Koöperatief Beperk (BKB), to sell their wool and mohair. The BKB would make use of shearing houses built by the government of Lesotho throughout the country to collect wool and mohair for sale in London and other international markets.

BKB would in return pay the farmers after deducting its commission. In most cases, the Lesotho farmers would be left unhappy after accusing BKB of charging exorbitant commissions. But that is set to come to an end, thanks to a new Australian investor, Stone Shi, who has pumped in M37 million in the construction of a 10 000 square metre shearing centre in Thaba-Bosiu for the Lesotho National Wool and Mohair Growers Association.
The association raised M4 million for the project.

Shi has 25 percent shares in the shearing centre while the association holds the remaining 75 percent shares.
Shi is the CEO of the shearing centre. With the centre fully operational, brokers such as BKB will no longer be required. Lesotho’s farmers will, for a change, have direct access to the markets through their own company.

The shearing centre was officially opened last week. Before the association and Shi joined hands to establish the shearing centre, BKB used a network of shearing houses erected by the government throughout the country. The agents would then collect the wool and sell to international markets.
BKB would in return pay the farmers after deducting its commission.

Now the Lesotho Wool Centre, owned by the farmers themselves, will be the one directly selling to the international markets without the services of brokers. The association has always enjoyed the use of 114 shearing sheds provided and staffed by the government and the wool would be collected by BKB to auctions.

Lesotho’s wool and mohair is primarily handled by BKB which presents it to the auction floors in Port Elizabeth and Durban.
BKB works on commission and wool and mohair is exported in the raw, un-scoured state (as is most of South Africa’s wool and mohair).
Due to quality considerations, Lesotho’s wool and mohair needs to be blended with other wool types in order to produce a specific “top” of a particular type demanded by spinners.

This blending process can only be done at the time of scouring – tops cannot be blended after scouring.
Pure lots of Lesotho wool and mohair, on their own, are generally not suitable for making tops.
BKB, in some instances, also re-grades and repackages Lesotho wool and mohair before it is presented for auction.
BKB provides the association with a comprehensive analysis of wool quality, quantities, shearing shed of origin, number of producers, numbers of sheep and goats shorn, auctions held and prices received.

A recent study by the Wool and Mohair Production Project says individual producers are paid directly by the broker.
They receive the international price for their product “and there is complete transparency in the transaction”.
“This wool passes through the association but wool lots retain the original grower’s identity to the auction floor and brokerage margins and transport and handling charges are minimal and completely transparent,” the study says.

Shi was roped in following a September 2014 project proposal supported by the IFAD, titled Wool and Mohair Promotion Project.
The project included a value chain study which identified the following issues that needed to be addressed in order increase overall productivity, increase financial returns from wool and mohair and maximize the project’s impact on reducing poverty and increasing employment:
l) The increasing degradation and low productivity of the rangeland in the face of increasing climate variability;
l) The low productivity and poor quality of the sheep and goat flocks;

l) The poor standard of wool and mohair handling – shearing, classing and presentation for sale;
l) The need to further develop cottage industries to produce higher value items for the high end of the market; and
l) The need to address the overgrazing through improved rangeland management.

In its quest to come up with a solution, the association raised M4 million to set up the Lesotho Wool Centre.
Small Businesses Development Minister Chalane Phori told thepost on Tuesday that this is meant to increase marketing value for farmers by exporting wool directly to international markets while cutting off middlemen.
This will see Basotho retaining better profits.

They can also take part in influencing the market price of farmers’ commodities, Phori said.
He said Lesotho was losing 20 percent before the new arrangement, which translated to about M50 million per year.
He said the conception of LWC was created by the association and Maseru Dawning in August 2014.

The agreement of LWC was signed in January 2016, the Joint Venture was set up in April and in July 2016 they got the trade licence with the registration number JY 2016 / 0014. In December 2016 they got the site lease and they started building LWC in April 2017.
“The wool store has 10 000 square metres which is the biggest woollen project in Africa,” Phori said.
“They have completed the construction of wool store and office,” he said.

Shi told thepost that he has been dealing with wool and mohair for the past 17 years in Australia “where Lesotho’s wool and mohair is highly valued due to its quality”. “Lesotho’s wool and mohair is combined with the long Australian’s mohair to make the best quality which is (popular) worldwide,” Shi said.

“Lesotho is a small country but has potential of producing more and high-quality wool and mohair hence i found it important to invest in Lesotho,” he said. “The agreement signed is going to be a long-term agreement as I am not willing to withdraw my agreement like other investors who did due to (Lesotho’s political) instability,” he said.

LWC will seek to minimise direct marketing costs such as transport handling costs and other selling costs.
“As a way of minimizing costs the company aims to eliminate the middleman and several handling points of the products,” Phori said.
“LWC guarantees the actual payment to farmers will be much more than before,” he said.
“In this way clients of LWC will realise high proceeds each season.”
Phori said he is proud that the LWC will guarantee employment to more than 100 locals when it is fully functional.
“Shi’s investment amount is huge, meaning he means nothing other than business but what is most pleasing is he has just 25 percent while Basotho have 75 percent in this agreement,” he said.

“The action says Lesotho’s economy is shifting upward a little bit,” he said. The Lesotho National Farmers Union (LENAFU)’s spokesman, Taoana Lephoto, said the venture is of great significance as oil that will be secreted while cleaning the wool will be collected and sold by Basotho.

“If Basotho would leave aside corruption, this deal is going to take Lesotho’s economy to another level,” Lephoto said.
“It is embarrassing for Basotho to call themselves ‘Ma-apara-kobo’ (those who wear the blanket) without even a single lesson of how to make that blanket yet they produce the wool and mohair that are used as materials for weaving blankets,” he said.

“It’s high time Basotho make the blanket with their wool and mohair produced in this country,” he said.
Masupha Nkopane, a farmer rearing 200 merino sheep from Matsieng, said he makes M50 000 per annum after shearing the sheep.
Nkopane said he is expecting the money to double after the establishment of the shearing centre in Thaba-Bosiu.

“The money we used to receive for our wool and mohair did not match the quality of our products,” Nkopane said.
“Because of Lesotho’s altitude, our wool is of high quality and clean, making us the most well recognised country worldwide in terms of wool and mohair production,” he said.

Prior to the establishment of the association the Basotho wool and mohair producers were confronted by low market returns and lack of market information, according to Nkopane. BKB was the only recognised trader who had the monopoly of buying their produce and marketing it to Europe.
Currently the main buyers of Lesotho wool are China, India, Czech Republic and other European countries.

There are about 37 500 sheep and goat farmers who rear a combined estimated four million sheep and goats.
The farmers employ about 75 000 herd boys.

Senate Sekotlo