Smallholder farmers want implementation of 10% tax on crude palm oil

Outgrower and smallholder farmers have taken cognisance of a publication in the 1^st June, 2015 edition of the Business and Financial Times, attributed to the Oil Palm Development Association of Ghana (OPDAG) and captioned ‘Suspend Implementation of 10% Adjustment Tax’. 
 

In that publication, OPDAG sought to impress upon government to shelve its policy initiative of imposing import adjustment tax on imported palm oil.

The Outgrower and Smallholder Farmers, the largest stakeholders as far as the oil palm industry in the country is concerned, were not part of such a landmark decision taken by the Association. We wonder how such a major decision could be taken without prior consultation with the major stakeholders -- the farmers/outgrowers.

Nigeria, our neighbouring country, has initiated a lot of measures to protect the local palm sector and encourage farmers, as the sector holds tremendous potential to create jobs and reduce poverty in the rural areas. Among some of the measures initiated by Nigeria to protect and sustain the oil palm sector are:

Imposition of 25% additional import adjustment tax on importation of Crude Palm Oil (CPO).

Moreover, the Nigeria government has included CPO/Vegetable Oil on the list of items which importers cannot apply the country’s foreign exchange earnings to finance importation. This means importation of crude palm oil will be 10% more expensive owing to the exchange rate difference between interbank and open market. 

Of course, like any effort that holds for rapid economic progress and change, it will greatly assist Nigerian domestic farmers and encourage local production, conserve the foreign reserve and improve employment-generation.   

However, in Ghana OPDAG turned a blind-eye toward the local farmers to please the importers and multinationals. 

The OPDAG was formed to promote and sustain the palm sector as it holds potential to help Ghana’s economy by providing jobs, much-needed foreign capital, and new technology and technical know-how. 

This is exactly the kind of investment partnership Ghana needs from the Association to fuel its growth in order to get its economy booming. 

Ghanaian officials could look to Nigeria as a model for smart development. The Association and the government must make it a priority to foster a vibrant palm oil industry.

The present attitude of OPDAG has put serious doubts in our minds as to its integrity in working toward the interests of farmers.

With appropriate duty, the palm sector will be able to attract investors to invest in the plantations -- which in the long run will increase local production of palm oil and reduce its importation.

The question agitating the mind of every oil palm farmer is, how can we boost local production when government continues to allow the influx of cheap, low-quality palm oil from the Far East to flood our market? 

In as much as the farmers recognise the need to bridge the gap between our current production and consumption, which is in excess of 260,000 metric tonnes and therefore cannot call for a total ban of the commodity, there is still a need to protect the local producers: that is, the farmers in particular and other stakeholders in the oil palm plantation industry to stay competitive. 

According to the Ministry of Food and Agriculture (MOFA), palm oil was the principal export from the then-Gold Coast and accounted for 75% of the country’s export revenue in the 1880s. How come we are now a net importer of the same commodity today? 

Is it not from the neglect and failure on our part as a people to pay serious attention to the sector? Our population continues to grow and this comes with a corresponding demand or consumption of palm oil. For how long shall we continue to rely on imports to the detriment of our already ailing economy, while we provide jobs for the exporting countries and leave our farmers to wallow in poverty?

Oil palm farmers are more than certain that the imposition of IAT on crude palm oil will have a positive effect on growth of the oil palm sector while increasing government revenue, and in the long run neutralise the threat that is draining the economy of much-needed revenue and thereby affecting the livelihood of farmers -- which constitute the largest stakeholder group of the industry.

We the outgrower and smallholder farmers believe that government has clear objectives and intentions to ensure the livelihoods of local farmers in the oil palm sector are safeguarded through various interventions, of which the IAT is part.

We therefore urge the government to expedite action on implementation of the IAT. With IAT, the price of CPO in Ghana will increase -- and this will have a direct and proportionate increase in the price of FFB which accrues to the benefit of farmers who are the largest stakeholder group in the oil palm industry.

The yield of Ghanaian oil palm farmers is 50% lower than their counterparts in the Far East. With the high labour cost, it is difficult for local farmers to compete without duty protection. The inability to compete will deter most farmers from engaging in cropping Oil palm, and thus further decrease our already insufficient production.

Without the duty protection, most investors would prefer the importation of cheap CPO to the establishment of plantations which render a lot of employment to thousands of people in the rural communities.