OBP’s lucrative FMD vaccine import business

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Information provided by Thoko Didiza, minister of agriculture, land reform and rural development, indicates that Onderstepoort Biological Products (OBP) is allegedly turning a profit of around R300 per unit of foot and mouth disease (FMD) vaccine imported from Botswana.

Didiza responded to a parliamentary question posed on 19 May 2023 by Noko Masipa, the DA’s shadow minister of agriculture. The question related to OBP’s purchase price for vaccines from Botswana per unit of FMD vaccine, as well as the price at which these units are being sold to the South African government.

Read more about OBP’s recent media day.

Government’s response

Didiza responded that OBP purchases FMD vaccine from Botswana at an average price of P1 201,73 (Pula) per unit, which is equal to an average of R1 563,42 per unit.

According to Didiza, OBP’s additional costs include:

  • Freight costs at 2,9% = R45,33.
  • Import duties at 29% = R453,33.
  • Inventory and handling costs at 3,69% = R60,44.
  • Onsite costs at 4,6% = R72,54.
  • Transport and logistics at 32% = R501,20.

“The inbound-landed cost per unit, therefore, is approximately R2 696,26,” Didiza replied. “The unit price is volume dependent on and influenced by currency fluctuations. Price changes per order depend on these two variables.”

Didiza further stated that OBP sells the FMD vaccine to the South African government at R3 022,21 per unit. “This all depends on the total of vaccines. OBP has not increased FMD vaccine prices for the last two years,” Didiza said.

Masipa told AgriOrbit that OBP’s reliance on imported vaccines was mainly due to infrastructure decay and this was unacceptable. He also expressed his disappointment over Didiza’s tardy reply. According to the rules of the National Assembly, written questions should be answered within ten days after it was posed. It took Didiza 38 days to respond, he said.

Read more about FMD here.

Thousands vaccinated, millions pocketed

A total of 634 000 animals have been vaccinated against FMD since the Department of Agriculture, Land Reform and Rural Development started vaccinating animals in March 2022 to curb the spread of FMD. This is according to DALRRD’s 31 May 2023 updated report on the FMD outbreak.   

FMD is a controlled disease and FMD vaccine is strictly controlled by state veterinary services, which means that vaccines are not available for sale to the public. As the sole state supplier of vaccines, OBP, has a monopoly on the supply of FMD vaccines.

However, OBP has never produced FMD vaccines, according to Didiza. “This is owing to the fact that the disease is classified as a transboundary animal disease which is very infectious, and the vaccine should be produced within a very strict biosecurity environment. The laboratory capabilities at OBP are therefore not suitable for production of this vaccine.”

Read more about OBP’s response to vaccine availability.

World renowned to implosion

Previously, FMD vaccine manufacturing was the primary responsibility of the Agricultural Research Council (ARC)’s Transboundary Animal Diseases facility. This facility opened its doors in 1984 to safely research highly contagious animal diseases, particularly FMD. According to the ARC’s website the facility previously enjoyed an international reputation as “the most sophisticated FMD laboratory in Africa.” It was designed to provide a diagnostic and research facility as well as a plant for vaccine production.

However, Didiza said the ARC had been experiencing budgetary constraints for several years, which was exacerbated by dilapidating and aging equipment and infrastructure. “Owing to budgetary constraints, the ARC could not retain expertise that brain-drained to competing industries. This has resulted in the Department importing vaccine from a suitable facility in Botswana.

Read more about the plan to make South Africa FMD-free here.

Botswana vaccine costs

Didiza added that government spent only R78 286 339 during the financial year ending 31 March 2023 in procuring the vaccine from Botswana through OBP.

However, in March 2023 DALRRD reported that nearly 600 000 animals had been vaccinated. At a vaccination cost of R1 563,42 per unit, this would bring OBP’s vaccination procurement cost to R938 052 000 between March 2022 and March 2023, according to AgriOrbit’s calculations. This is just for the procurement from Botswana. The total cost for DALRRD (R3 022,21 per unit x 600 000) amounts to over R1,8 billion. – Susan Marais, AgriOrbit

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