A nail in the coffin of agricultural sector?
By Hon. Dr Owusu Afriyie Akoto, Mp Kwadaso
Whoever came up with the idea of imposing a levy on the import of agricultural chemicals, machinery and equipment has done the greatest damage to an already ailing agricultural sector in Ghana.
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By the measure of annual growth performance, Ghanaian agriculture has been running to a virtual halt since the drought in the 2007 farming season. From negative 1.7 per cent that year (2007), agricultural growth recovered strongly to 7.4 per cent in 2008, 7.2 per cent in 2009 slowing to 5.3 percent in 2010. Growth hit the bottom of 0.8 per cent in drought-hit 2011, then stayed down at 1.3 per cent in 2012.
The last Budget Statement expects 3.2 per cent growth in 2013. The indications so far are that we shall be lucky to end the year 2013 with growth of two per cent.
The sharp decline in cocoa production since the peak in 2010/2011 and the rise in fertiliser prices this year, support this assessment.
There are far-reaching implications of such a poor growth performance for both the economy and the citizenry. Consider the fact that the agricultural sector continues to provide the most employment opportunities for majority of our workforce; provides most of our foreign exchange earnings; and the fact that the poorest in our society are found among farmers and fisher folks who reside in the rural areas.
The drastic slow down of agricultural growth means rising unemployment and deepening poverty in rural areas with the acceleration of migration of female porters (Kayayei) and others to the urban centres with all the related social dislocation we are already witnessing.
The poor in the urban areas also suffer. Increased import levy on farm inputs does not only mean increased costs of production to farmers and fishers, they are also passed on to increase food prices in the urban areas. Since food constitutes over 60 per cent of the household budget of poor families in the urban areas, they suffer most from rising food prices.
It is against this background that one has to view the recent imposition of a special levy on the importation of agricultural inputs.
In its desperate attempt to raise revenue to close the yawning gap in its finances, the government submitted a bill to Parliament on June 26, 2013 with the title “Special Import Levy Bill”. The bill has only six clauses. But buried deep in clause (2) of the bill is “The Levy imposed under section 1 shall be computed at the rates specified in the table set out in the schedule”.
The schedule is an attachment to the document showing the description of goals affected and the rate of Levy. The rate of levy is one per cent of CIF value and the goods on which the levy is to be imported are “Machinery and equipment listed under chapter 84 and 85 of the harmonised system and customs tariff schedules 2012.”
The machinery and equipment listed under chapters 84 and 85 include outboard motors and fishing nets, farm machinery including tractors and implements such as ploughs, harrows and so on. Dairy and milking machinery for livestock development are also listed.
Fertilisers were listed but withdrawn on the sheer resistance from the floor of Parliament. In spite of the strong arguments put forward on the floor of the chamber by opponents of the bill, the rest of the farm and fishing inputs could not escape and are now ensnarled in the net of the exchequer.
In drawing up the bill, the government should have been mindful of the sorry state of both the domestic fishing and livestock industries.
These are the two main sources of protein intake in the country. Fish supplies 60 per cent of our protein intake and livestock, pretty much the rest. In spite of such a strategic importance to our food and nutritional needs, the gap between domestic production and national requirements has been widening over the years.
Consequently annual imports of fish, poultry and meat products have been rising strongly over the last 10 years or so.
Foreign exchange expenditure on these items has also been rising. Given these worrying negative trends in the performance of agriculture, the fishing and farming subsectors should rather be targeted for special support rather than being sacrificed on the altar of desperate measures to raise funds to plug a gaping hole in our public finances.
The author is the Ranking Member for the Select Committee on Food, Agriculture and Cocoa Affairs of the Parliament of Ghana.