Govt must urgently lift maize export ban – IAPRI

Government should urgently lift the maize export ban because it has negatively affected farmers’ incomes and contributed to the loss of assets, says the Indaba Agricultural Policy Research Institute (IAPRI).

And IAPRI have warned that government’s insistence to implement the controversial Sales Tax on April 1, will only increase the cost of doing business for producers in the agricultural sector.

In its latest policy brief released, February, IAPRI appealed to government to urgently lift the maize export ban it had implemented last November.

IAPRI, the agro-focused think-tank and agricultural policy research and outreach institute, revealed that farmers and grain traders’ incomes had dwindled, while the maize export ban had equally contributed to the loss of assets that were used as collateral due to farmers’ inability to repay loans on some credit facilities.

“In Zambia, the challenges in the agricultural sector are readily observable among commercial farmers. Close to forty commercial farmers have lost their farms to the banks due to the events and policies of the last 3-4 years, with the print media advertising bank-repossessed farms. Moreover, poorly-timed rotations of stocks in the maize market from the strategic grain reserves have adversely affected grain sales among private grain traders. This practice, coupled with recurring maize export bans, undermines the ability of agricultural value chain actors to pay back agricultural loans. This results in the repossession of farms by lenders,” IAPRI revealed.

“We recommend that the government should urgently allow the export of maize and maize products before the next harvest to allow businesses to take advantage of regional market conditions before local prices plummet. Failure to do so will lead to another price plunge as experienced in the 2017/18 marketing season, given that we expect surplus maize in the 2018/19 agricultural season. Trade restrictions are detrimental to the sector and have a negative spillover effect on farmers and jobs are lost across the value chain.”

And IAPRI have warned that government’s insistence to implement the controversial Sales Tax on April 1 will only increase the cost of doing business for producers in the agricultural sector.

Government is set to re-introduce Sales Tax as proposed in the 2019 national budget after next month, partly in a bid to avoid paying VAT refunds, especially to mining companies.

“With a desire to rationalise the tax system and raise more money for the country, the Zambian government has introduced a new tax regime including EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) and Cost of Goods Tax. These taxes are likely going to increase the cost of doing business in the agricultural sector. Government announced that the VAT was going to be replaced with a Sales Tax as well as lower the tax credit for interest from 100 per cent to 30 per cent of EBITDA,” stated IAPRI.

“While these measures could increase government revenue and save the government from making VAT refunds to many sectors, especially mining, the potential impact on the agricultural sector would be reduced agricultural growth unless the sector is exempted from the changes. This is because the Sales Tax cannot be claimed, unlike previously, where zero-rated VAT allowed businesses to claim back some VAT on designated intermediate inputs. The problems around the cost of doing business appear to be driven by the lack of consultation and the urgent need to mobilise resources for the Treasury from different sectors.”

IAPRI’s latest policy brief was dubbed: Agricultural Sector in Peril: Is Zambia Killing the Goose That Lays the Golden Egg?

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