Veterinary experts have drawn attention to the deterioration of yet another critical state-owned enterprise, Onderstepoort Biological Products. The dominant source of animal vaccines in South Africa, its failure spells doom for our critical agriculture industry.
A group of thirteen veterinary experts this week signed an open letter, calling attention to the deteriorating circumstances at Onderstepoort Biological Products (OBP), a state-owned enterprise (SOE) which is the veterinary medicine production arm of the Onderstepoort veterinary research and training complex.
It is the primary source for many animal vaccines, to counter diseases such as African Horse sickness, Rift Valley fever, bluetongue disease, heartwater, anaplasmosis, red water, and lumpy skin disease. Some of these vaccines cannot be obtained anywhere else, domestic or foreign.
Now it seems some of them can no longer be obtained from OBP, either.
Why animal vaccine production requires a state-owned monopoly is anyone’s guess. It does have an historical basis, of course. It had its origins in government support for the nascent agriculture industry more than a century ago, when a key challenge to farming livestock in South Africa was overcoming some of the region’s unique livestock diseases.
But that was a century ago. Since then, we’ve fought world wars, defeated both communism and apartheid, invented computers, and established a new, thriving economy based on free markets, vigorous competition, and global trade.
Why OBP remains an antiquated government-run enterprise to this day is beyond comprehension.
Copy and paste
One could copy and paste a narrative here from Denel, or SAA, or the Post Office, or Alexkor, or the SABC, or Transnet, or any other SOE, and it would tell the story of why certain vaccine deliveries from OBP first slowed to a trickle, and then ground to a halt.
Seven years ago, according to the letter’s authors, the facility was given half a billion rand to develop a new production facility. The CEO got a new en-suite toilet, offices were upgraded, a canteen was built, and a bloated workforce lacking necessary skills were paid, but of the new production facility, there is no sign.
When, in 2017, a competent CEO was appointed who started to improve production performance and knock the place into shape, unionised staff went on strike and disgruntled former employees kicked out over corruption launched a smear campaign to get the CEO ousted. They were successful.
A new board was appointed in 2020, but the authors of the open letter allege that few of its members have the required expertise in OBP’s core business. The upshot? A crippled SOE that poses a threat to the entire country.
‘Not rosy’
Ed Stoddard, from Daily Maverick, interviewed some of the key people, including OBP board chair Rene Kenosi.
She admitted that the picture was ‘not rosy’, and that her board inherited significant production problems due to infrastructure breakdowns.
‘If you are sitting with an organisation with aged infrastructure, you are not going to wake up and wave a magic wand and have new infrastructure,’ she told Stoddard. ‘We are going through a process of maintaining, augmenting and procuring equipment which is planned over the short, medium, and long term. Equipment was not maintained in the past.’
One wonders, then, where the change from the R500 million upgrade fund that wasn’t spent on luxuries went.
The consequences of OBP’s failures are grave. A wet 2021/2022 season means that diseases spread by parasites are thriving, while many cattle, sheep, and horses remain unvaccinated against these diseases, and ‘face a very bleak 2022’.
The authors say: ‘OBP urgently needs proper professional management and to deliver on their mandate: accountability needs to be enforced. OBP needs transparency in the investigation of alleged criminal activity and incompetence.’
Competition
The solution, of course, is clear. In the private sector, when one company fails to produce a given product, another can be relied upon to step into the breach. That’s how competition works: it rewards only the most successful companies with profits, and allows the least successful to fail, freeing up the capital invested in them for better uses.
Much of this happens behind the scenes. Most customers only see that there is always a selection of competing products on sale. They’re hardly aware of the market dynamics of the succeeding and failing companies that produce that particular product selection and keep the shelves filled.
Over a hundred companies competed to develop a vaccine against Covid-19, for example. Do consumers know, or care, who succeeded and who failed? Do they know that major pharmaceutical companies like GlaxoSmithKline and Merck were once in the race, but lost billions because Pfizer, J&J, and AstraZeneca turned out better products?
In the end, the failure of dozens of would-be vaccine producers did not lead to a catastrophic absence of vaccines on the market, because there were other companies who were able to fulfil global vaccine demand.
When a government-owned monopoly fails, by contrast, it can cause a catastrophic failure. Without OBP’s vaccines, South Africa’s entire livestock industry is at risk, which in turn threatens food security for millions of South Africans. There are no competitors to pick up the slack.
Turn it over
The authors of the open letter appear to be well aware of this, and of the inherent superiority of private sector production.
They write: ‘The vaccine strains that have been developed by OVR [Onderstepoort Veterinary Research] with taxpayer’s money must be made available to private companies if OBP cannot guarantee availability of vaccines in the next three months. This is essential for the maintenance of livestock and animal health in SA and neighbouring countries.’
The letter continues: ‘We cannot just hope this will end well. We need to try to help OBP to function as it is supposed to, in every way possible. The alternative is to promote veterinary vaccine production by private companies, which may be the best solution.’
Now, we could indeed wait for a turnaround plan for OBP, backed up by gilt-edged promises from agriculture minister Thoko Didiza.
Or we could consider the experience of turnaround plans with SAA and Prasa and Eskom, and reject that idea with the contempt it deserves. The agriculture industry needs animal vaccines today, not by 2026 if all goes well, and 2031 if the money gets stolen again.
Farmers can’t vaccinate their livestock with promises.
The vaccine-related intellectual property of OBP and OVR, the research arm of the complex, should be turned over to the private market, to allow new competitors to emerge who can rush veterinary vaccines into production.
These competitors should not be hand-picked by government officials. They should not be contractors on tender. Nor should limited numbers licences be awarded. Producers should emerge organically. Any company able to meet the basic standards for producing veterinary medicine should be granted a licence to compete on a free and open basis.
Once that is done, sell what is left of OBP and OVR, separately or together. Let them compete in the private market. That way, if they succumb to greed, corruption, mismanagement or sheer incompetence, there is less chance their failure will drag the entire agricultural sector down with it.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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