Farmers feel fleeced by wool monopoly

Mohlalefi Moteane runs his wool and mohair brokerage out of his veterinary practice, housed in a small building on a dirt road in Maseru, the capital of Lesotho.

When a young Chinese business person visited in 2012 asking to join the business, Moteane turned him away. He saw no need for taking on a partner he didn’t know.

Six years later the same business person, Guohui Shi, and his Lesotho Wool Centre were awarded a monopoly over the wool and mohair trade in Lesotho, meaning Moteane and other small brokers would have to shut down.

Since then, thousands of farmers have had to wait a year or more to be paid by Shi’s brokerage; some say they’ve been underpaid and others say they have not been paid at all.

About 75% of Lesotho’s population lives in rural areas and relies on wool and mohair for income. Some herders have been forced to eat their flocks to survive. At $67m, Lesotho’s wool industry is small but significant for the nation.

It dates back to the 1850s, when migrant workers returned to Lesotho from SA with merino sheep. Today, Lesotho is the world’s second-biggest mohair supplier; it controlled 17% of the global supply in 2017.

The sheep are a ubiquitous sight in the country, as are Angora goats, whose soft coats are used to make mohair. Herds graze on the roadside in Maseru and shearers set up makeshift stalls on the sidewalk, where farmers bring their flocks.

Aside from wool and mohair, Lesotho has little in the way of industry. There are a few Chinaowned textile factories, and the government exports water to SA. Per-capita GDP is about $1,200, but farmers can earn as little as $265 a year. For four decades before the government awarded the wool trade to Shi, farmers typically took their fibres to SA to be auctioned off.

SA’s BKB, headquartered in Port Elizabeth, once dominated the trade alongside a handful of smaller competitors, including Moteane. Farmers were usually paid in about six weeks.

“Why do you create this kind of legislation in the first place, when the farmers have never complained?” asks Moteane, while rifling through newspaper cuttings about the Chinese business person.

Farmers and the Lesotho National Wool and Mohair Growers Association (LMWMGA) say they were not consulted by the government before it awarded the monopoly to Shi.

In a valley below the rocky outcrop of Thaba Bosiu, 38year-old farmer Leketla Seqhee looks over his herd of 37 sheep and seven Angora goats.

While he still employs shepherds to tend them, others have fired theirs. He has struggled to pay his children’s school fees.

“They have cheated us, they didn’t pay us,” he says in Sesotho, of the Lesotho Wool Centre.

The farmers’ problems have been caused by “these harsh laws by our government”.

“We struggled a lot. We are still struggling,” he says.

Little is known about Shi who goes by the nickname Stone Shi and how he won the monopoly. After being turned away by Moteane, he began working with the LMWMGA.

While the association partnered with Shi to build the Lesotho Wool Centre, it says it derives no benefit from the brokerage business and did not agree to the monopoly.

“We haven’t got any money from mohair. Zero,” says Mothibeli Makhetha, a farmer and an office-holder at LMWMGA.

“We are angry with the government because it is the one that pushed us to work with Stone Shi.”

Communications minister Thesele Maseribane, who also leads a party in Lesotho’s governing coalition, says Shi is one of few foreign investors and needs to be “protected”.

Shi’s Lesotho Wool Centre consists of a 10,000m² warehouse eerily empty but for a few bales of wool in one corner and a pile of mohair bales in another. There’s little visible equipment and few workers.

Shi initially agreed to an interview, but when the day arrived, a representative said he was out of the country. He did not answer calls to his cellphone or reply to text messages.

John Koenane, the company’s head of IT, answered questions instead. “We have paid most of the farmers,” he said, adding that 379-million maloti ($25m) has been paid out for 2018’s harvest. That compares with normal annual income of 800-million to one-billion maloti.

Payments have been delayed, Koenane said, because samples of wool and mohair had to be sent to New Zealand to be tested for the fineness of the fibre after an SA industry body refused to do it.

The wool is auctioned online, mainly to anonymous Chinese buyers. Koenane said he could not disclose the buyers’ names for “political” reasons. Export documentation shows that at least some of the wool exported by Shi goes to Yulian Wool Industry in Jiangbu, China.

Calls to that company were not answered.

Wian Heath, the MD of the Wool Testing Bureau of SA, said Shi declined to bring full bales of wool and mohair to be tested.

With Lesotho’s governing party split, politicians fear a backlash from farmers. In June, thousands who said they had not been paid for their wool marched to parliament.

Two months later the government eliminated the monopoly, but is still insisting the fibres be auctioned locally.

“There was a lot of noise from farmers, lots of problems. All of them are angry,” says Kimetso Mathaba, an opposition legislator and the head of a parliamentary committee that is looking into the matter.

“Mr Stone told us his side of the story. It was very different from what the farmers and associations are saying.”

The biggest question, still, is how Shi managed to persuade the country to entrust him with its biggest export.

“Who is this fellow?” asks Moteane. “I still want to know.”

WE ARE ANGRY WITH THE GOVERNMENT BECAUSE IT IS THE ONE THAT PUSHED US TO WORK WITH STONE SHI