Rethink benchmark policy - Oil palm stakeholders

BY: Ama Amankwah Baafi
Mr Samuel Avaala, President of OPDAG
Mr Samuel Avaala, President of OPDAG

The President of the Oil Palm Development Association of Ghana (OPDAG), Mr Samuel Avaala, has called on the government to rethink the application of the 50 per cent benchmark value policy on palm oil (vegetable cooking oil).

He said the benchmark had not achieved the purpose but rather led to more losses and unfair competition for the local industry.

In a media release issued on September 7, 2021, he said the under-declaration and sometimes misclassification affected the benchmark value policy.

“So, the economic management team thought that people were under-declaring and even evading duty altogether because duties were high.

“We said let’s implement this benchmark policy with the assumption that the goods would come in the correct way and importers would pay the right duty because it is lower. Unfortunately, that has not happened,” he said.

He said the revenue government envisaged from the policy was still not being realised because importers still brought the vegetable oils in and pay half-duty, on top of under-declared invoice values.

“If the government has to resolve this, it must exempt palm oil from the 50 per cent benchmark policy implementation and make sure that Customs, at the entry point, is doing its work. If we do this, we will find ourselves building a local value chain that gives livelihoods to thousands of people in the upstream and also increase government revenue,” he said.

Read: Moves to improve palm oil quality in Ghana


Engagements

According to Mr Avaala, who is also a member of the board of the Tree Crops Development Authority (TCDA), as stakeholders, the OPDAG have had some engagements with the Economic Management Team (EMT) and the Ghana Revenue Authority (GRA) to detail the adverse impact of the 50 per cent benchmark policy on government revenue and the sector.

“If government has no other reason to exempt palm oil from the implementation of the policy, it should think about the local industry and repercussions on the entire oil palm value chain – a value chain that has rightly been selected as one of the six tree crops which have been packaged under the noble and laudable TCDA, with huge potential for poverty reduction and improved livelihoods,” he said.

The oil palm industry in the country has about 290,000 smallholder/out-grower farmers. There are about 12 medium-to-large scale palm oil mills and four industrial scale refineries; and more than 3,000 artisanal palm oil millers. The industry provides direct and indirect employment for more than 100,000 people downstream as well.

“It is clear that sacrificing such an industry to promote imports will cause more harm than good. Hence, our call for a relook at implementation of the 50 per cent benchmark policy. It cannot go wholesale,” he added.

Read: Oil palm producers commend government


Revenue loss

Available data show that as of July 2021, the government lost more than GH¢11.7million to under-declaration by 14 palm/vegetable oil importing companies and over 34,000 metric tonnes of vegetable oil were underdeclared.

In 2019, the government introduced a 50 per cent benchmark policy in 2019, which saw the duties on some imported products including palm oil slashed by half.

The purpose was to discourage and stop the practice of under-declaration and misclassification of targeted goods to be able to accrue the right revenue.