Tweet
Duty-waiver clampdown
Gov't moves to encourage local agriculture production, linkages with other sectors
Wednesday, March 19, 2008
The billions of dollars that government forgo each year to facilitate duty-free access to importers of meat and produce played a part in the new administration's decision to re-examine its flexibility in issuing waivers.
But far more important to the decision to tighten issuance of duty-waivers on agricultural imports during the fiscal year, which starts April 1, according to Christopher Tufton, is the need to encourage strong local primary production and agro-links with other key sectors.
This said Tufton, who is the minister of agriculture, will form a key part of his policy focus on food security.
"The world has never before seen these challenges as it relates to food security," opined Tufton in an interview with the Business Observer. "The issue now is not just one of access to cheaper food, but of food security for society and the economy."
In the context of a global economy food prices have run away with rising commodity prices on increased demand for food while growing energy needs have created a 'food for fuel' competition, where the demand for biofuels have turned the focus of many farmers to feeding refineries rather than people.
Tufton's take on domestic agriculture, which contributes to approximately six per cent of gross domestic product (GDP) while employing close to one-sixth of the nation's employed, is that the sector needs a major overhaul (see related story on page 3).
This, he says, will include the development of centralised processing, packaging, marketing and distribution facilities, through engaging local farmers in clusters using best farming practices and technology, such as greenhouses.
But the key to encouraging local production is providing incentives for major importers of agricultural inputs and placing more focus on encouraging partnerships between them and local farmers.
"The government intends in the coming year to be less liberal in the application of duty waivers," said Tufton, "especially, for items that can be produced locally. It is not just an issue of revenue, but a strategic position to encourage linkages between primary production and processing, which is critical to food security."
An analysis of a few basic agricultural items, including beef, poultry, mangoes and onions, imported under special duty waivers during the fiscal year that ended March 31, 2007, revealed that the government had given up $4.6 billion in duties on over $6 billion worth of imports, translating to as much as a 90 per cent subsidy on the price for some items, making it difficult for local farmers to compete.
"We have seen (over the years) the issuance of special waivers becoming the norm rather than the exception," Tufton told the Business Observer. "Some of the duties are high and have to be re-examined, but when duties are granted up to a certain point, it in effect becomes a subsidy to foreign producers."
A major concessionaire of special waivers have been corn importers, who last year brought in $5-billion worth of shelled corned during the last fiscal year duty-free, or without having to fork out the $3.5 billion it would have cost in duties otherwise.
That, coupled with the high price of corn, which is expected to remain high over the next decade according to the US Foreign Agriculture Office (FAO), has prompted the government to look at growing the grain locally.
"We are looking at 2,000 to 3,000 acres, but we are in the preliminary stages," said Tufton.
One major importer of the grain, Christopher Levy of Jamaica Broilers, does not believe local corn production is feasible.
"It is not a reality and not even worth pursuing... the scale is totally different and the economics is just not there," he told the Business Observer. "The world market for corn is as efficient as it can be, so growing it in Jamaica is just not an option."
On the overall move by the government, Levy's thought was that "imports that go into local production are essential and Jamaica obviously can't be expected to have all the raw materials for all of the production".
But other agro processors interviewed by the Business Observer welcomed the move.
Woodrow Mitchell, managing director of Walkerswood, supports the move, but hopes the new administration takes a cautious approach.
"We have to be careful that we don't close that door totally because there are times like now where the drought really takes hold of the proper bread basket and we are not at a stage yet where we are talking about greenhouses and enough water for agriculture," said Mitchell.
Dr Juliette Newell of Tijule Company Limited, which primarily focuses on canning ackees, also supports the move once farmers are provided with enough incentives, market information and effective clearing houses for produce are put in place.
"What needs to be done with the farmers is that they need to be given some incentives and they need to have cross dialogue and consultancy between the farmers and processors, so that we can know when they are planting, when it is going to come in," she said.
Gov't moves to encourage local agriculture production, linkages with other sectors
Wednesday, March 19, 2008
The billions of dollars that government forgo each year to facilitate duty-free access to importers of meat and produce played a part in the new administration's decision to re-examine its flexibility in issuing waivers.
But far more important to the decision to tighten issuance of duty-waivers on agricultural imports during the fiscal year, which starts April 1, according to Christopher Tufton, is the need to encourage strong local primary production and agro-links with other key sectors.
This said Tufton, who is the minister of agriculture, will form a key part of his policy focus on food security.
"The world has never before seen these challenges as it relates to food security," opined Tufton in an interview with the Business Observer. "The issue now is not just one of access to cheaper food, but of food security for society and the economy."
In the context of a global economy food prices have run away with rising commodity prices on increased demand for food while growing energy needs have created a 'food for fuel' competition, where the demand for biofuels have turned the focus of many farmers to feeding refineries rather than people.
Tufton's take on domestic agriculture, which contributes to approximately six per cent of gross domestic product (GDP) while employing close to one-sixth of the nation's employed, is that the sector needs a major overhaul (see related story on page 3).
This, he says, will include the development of centralised processing, packaging, marketing and distribution facilities, through engaging local farmers in clusters using best farming practices and technology, such as greenhouses.
But the key to encouraging local production is providing incentives for major importers of agricultural inputs and placing more focus on encouraging partnerships between them and local farmers.
"The government intends in the coming year to be less liberal in the application of duty waivers," said Tufton, "especially, for items that can be produced locally. It is not just an issue of revenue, but a strategic position to encourage linkages between primary production and processing, which is critical to food security."
An analysis of a few basic agricultural items, including beef, poultry, mangoes and onions, imported under special duty waivers during the fiscal year that ended March 31, 2007, revealed that the government had given up $4.6 billion in duties on over $6 billion worth of imports, translating to as much as a 90 per cent subsidy on the price for some items, making it difficult for local farmers to compete.
"We have seen (over the years) the issuance of special waivers becoming the norm rather than the exception," Tufton told the Business Observer. "Some of the duties are high and have to be re-examined, but when duties are granted up to a certain point, it in effect becomes a subsidy to foreign producers."
A major concessionaire of special waivers have been corn importers, who last year brought in $5-billion worth of shelled corned during the last fiscal year duty-free, or without having to fork out the $3.5 billion it would have cost in duties otherwise.
That, coupled with the high price of corn, which is expected to remain high over the next decade according to the US Foreign Agriculture Office (FAO), has prompted the government to look at growing the grain locally.
"We are looking at 2,000 to 3,000 acres, but we are in the preliminary stages," said Tufton.
One major importer of the grain, Christopher Levy of Jamaica Broilers, does not believe local corn production is feasible.
"It is not a reality and not even worth pursuing... the scale is totally different and the economics is just not there," he told the Business Observer. "The world market for corn is as efficient as it can be, so growing it in Jamaica is just not an option."
On the overall move by the government, Levy's thought was that "imports that go into local production are essential and Jamaica obviously can't be expected to have all the raw materials for all of the production".
But other agro processors interviewed by the Business Observer welcomed the move.
Woodrow Mitchell, managing director of Walkerswood, supports the move, but hopes the new administration takes a cautious approach.
"We have to be careful that we don't close that door totally because there are times like now where the drought really takes hold of the proper bread basket and we are not at a stage yet where we are talking about greenhouses and enough water for agriculture," said Mitchell.
Dr Juliette Newell of Tijule Company Limited, which primarily focuses on canning ackees, also supports the move once farmers are provided with enough incentives, market information and effective clearing houses for produce are put in place.
"What needs to be done with the farmers is that they need to be given some incentives and they need to have cross dialogue and consultancy between the farmers and processors, so that we can know when they are planting, when it is going to come in," she said.