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Company gets Shs16b tax break to import rice

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A rice grower at Doho rice farm . A row is brewing between Trade minister Amelia Kyambadde and rice growers over allowing a single firm to import rice from Tanzania tax-free. PHOTO/FILE

A row is brewing between Trade minister Amelia Kyambadde and rice growers over allowing a single firm to import rice from Tanzania tax-free, a move other players say disadvantages them and frustrates the growing of rice in the country.
The Rice Association of Uganda (RAU), as a result, has sent a protest note to Ms Kyambadde, questioning the logic behind the ministry’s decision to allow a single firm to import 50,000 metric tonnes of rice from Tanzania without paying taxes.

The complainants argue that if the decision of the ministry was to allow importation of rice from Tanzania, it should have been open up to whoever is willing to engage in the business.
The importation of the cheap (tax-free) rice is hurting the rice growers, they  say.
The ministry issued an import permit to Ms Gotovate Uganda Limited on July 15.

The ministry also worked to ensure that the firm got a tax waiver which allowed it to bring in the rice without paying VAT and withholding tax. The import permit is valid until December.
The rice farmers say Gotovate Uganda Limited and Mansoor Mohamed Kayondo, to whom some of the documents related to the rice imports are addressed, were not known as players in the rice sector until then. By press time, we were unable to reach Mr Kayondo, to whom the documents directed to Gotovate were addressed.

“I find it odd that (the Ministry of) Trade would be soliciting from (the Ministry of) Finance an exemption for an importer. It is the trader’s job to solicit and not the minister,” Ms Rachel Mbabazi, the chairperson of RAU, told Sunday Monitor on Thursday afternoon.
Ms Mbabazi also thinks the decision is a contradiction of the “Buy Uganda Build Uganda” (BUBU) policy that the Ministry of Trade has been promoting as a means of boosting local consumption and increasing household incomes.
She has now penned a letter demanding that Ms Kyambadde explains herself.

In the letter, dated September 3, a copy of which Sunday Monitor has seen, Ms Mbabazi questions why Ms Kyambadde took the unilateral decision to allow the importation of rice on concessional terms without first consulting other stakeholders.
“If we had been asked to offer an opinion, we would have surely explained the harm in such an action. I would, therefore, like to request for enlightenment regarding the conditions under which a single company was granted a stay of application on 18 per cent VAT,” Ms Mbabazi wrote.
The Commissioner of External Trade at the ministry, Mr Emmanuel Mutahunga, declined to discuss matters around the concessional permit.

“That is a high profile matter that would require the minister herself. Please get in touch with her,” Mr Mutahunga said.
By press time, our calls to minister Kyambadde’s known mobile telephone number went unanswered. She also did not respond to text messages. It is estimated that least $4.5m (approximately Shs16.72b) in taxes, which should have been collected by the Uganda Revenue Authority (URA), has been lost as a result of the tax waivers.

Sector reeling
Ms Mbabazi says the rice, which was imported under the arrangement and clearly labelled “Islamic Relief Rice” ,has flooded the market, displacing locally produced rice.
Mr Venugopal Pookat, the managing director of Kibimba Limited, formerly Tilda Uganda, told Sunday Monitor that locally produced rice can hardly compete with imported rice because it comes in on the cheap.
“We have tried to reduce the prices as much as possible but we still cannot compete,” Mr Venugopal said.
This has placed actors in the sector in jeopardy at a time when they are struggling for markets due to the effects of the Covid-19 pandemic.

“Because of this (flooding of tax-free rice on the market) farmers are forced to store their paddy hoping for better prices in the future. It is not only our local farmers who have been affected,” Ms Mbabazi writes.
She hastens to add that it is not only farmers that have been affected by the cheap tax free rice.
“This has also led to a reduction in business for local millers. The entire rice industry and the livelihoods of nearly three million people who depend on smallholder production is in distress because of this decision,” she adds.

Long standing war with Tanzania
Mr Phillip Idro, the chairperson of the Rice Millers Council of Uganda, told Sunday Monitor that most rice farming communities, for example those in Nwoya and Bulambuli districts, have since opted to grow other crops, especially fruits and vegetables until rice from Tanzania stops coming in.

Mr Idro said this incident is the latest in a long standing fight that local business people have been having with their counterparts in Tanzania.
In 2018 Tanzania banned Ugandan sugar on its market on grounds that Ugandan sugar producers were importing cheap sugar from Kenya and Brazil and repackaging it for export to Tanzania.  It then imposed a 25 per cent excise duty on sugar that had been exported by Kakira Sugar Limited. The sugar was later returned to Uganda.

Now Mr Idro says the fight over rice came up in around 2017, when Ugandan millers sought to import paddy rice from Tanzania, but the Tanzanians insisted on selling milled rice, which the local millers rejected opting to import from Pakistan.
“We proposed to have a quota slapped on imported rice from Tanzania, but Ugandan officials abandoned us. We are now on our own yet, the Tanzanians will not negotiate with us because we are not in government,” Mr Idro said.
URA QUIET
Speaking to Sunday Monitor by phone on Thursday, Ms Mbabazi said the only way the situation in the sector can be normalised is by levying taxes on the rice.
“All that we are saying is that the tax should be levied on the rice. If they pay VAT and withholding tax, it will bring them back on a level playing field with the rest. They should pay tax for whatever had come in earlier,” Ms Mbabazi said.
She said  this was drawn to the attention of URA during a September 18 meeting, but that the tax body is yet to respond.
On Thursday afternoon the manager of public and corporate affairs at URA, Mr Ian Muhimbise Rumanyika, promised to revert, saying he was yet to get clarification on the issues, but he had by press time not done so.

**Daily Monitor

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Access to land, capital hampering youth’s involvement in agri-business

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Stakeholder engagement with governments to support the youths should be a component of every programme

Young people in sub-Saharan Africa have keen interest in agriculture especially with the use of technology but are hampered with numerous challenges including limited access to land, skills set, sustainable financing and access to markets, a new report has revealed.

A new study carried out by Heifer International in 21 African countries titled ‘The Future of Africa’s Agriculture – An Assessment of the Role of Youth and Technology,’ reveals that 10 out of 11 countries, with the exception of Tanzania agreed that the most important support required is funding.

However, more training and mentorship were seen as more important than funding in Ghana, Kenya, Tanzania and Zimbabwe.

The survey also reveals that whereas more youths in Uganda, Tanzania and Zimbabwe stressed the need for support in the area of access to markets, their counterparts in Senegal, Kenya, Nigeria and Ghana prioritized the need for support in agri-technologies. Access to land was the major concern for the youth in Rwanda, Zimbabwe and Zambia.

The organisations working in the sector suggested that the best way to engage youths in agriculture is through technological innovation (39%), government support for young farmers (32%) and inclusion of youths in agriculture policy formulation (21%).

“Most youths in Africa also do not have access to land for agriculture.  59% of youths surveyed do not have access or own land. Land ownership amongst young people is lowest in Ghana, Zambia, Senegal and Rwanda,” the survey notes. “Youths in Malawi seem to have access to land, with only 14% having no access, the lowest among countries surveyed.”

Technology adoption

Overall, technology adoption in Africa too remains low, with Ghana, Senegal and Zambia having the lowest agri-tech adoption rate.  Zimbabwe, Kenya and Nigeria have the highest technological adoption rates, according to the survey that featured 30,000 youths, stakeholders in innovations and small holder farmers.

William Matovu, a director at Heifer International-Uganda said the paradox of Africa’s economic development is that the continent’s urban and rural populations who produce most of the food is mostly comprised of smallholder farmers practicing subsistence farming while living in extreme poverty.

“This scenario scares away the continent’s youth from careers in agriculture, yet ordinarily Africa’s youth should be replacing the aging farming population but this generational shift is not happening fast and well enough to secure Africa’s food security goals,” he said.

He reckoned that Africa’s youths disapproving attitude towards agriculture is mainly a result of lack of funding which is the biggest barrier towards their interest in the sector.

Africa’s agricultural sector accounts for nearly 30% of the GDP of sub-Saharan Africa and employs 54% of the work force, but it is still underdeveloped.

Mondo Kyateeka, the Commissioner for Youth and Child Affairs at the Ministry of Gender, Labour and Social Development said unfortunately, young people are selling off the only available land to migrate to cities or go abroad for low-skills jobs

He said there are also feelings that older people are not willing to relinquish the land they can no longer use, to the younger persons to use it.

He, however, said the government is seeking ways of curbing the sale of agricultural land, saying the position is that agricultural land should remain for that purpose.

Key recommendations

As a result, the survey recommends a review of existing programmes that targets smallholder farmers and that youths must be conducted to determine if the current strategies support the African farmer with the use of technology.

“Innovation must be viewed within the context of the current realities,’ the survey notes. Beyond a smart App, the survey says providing linkages to local and regional markets will go a long way in improving the financial bottom-line of every farmer. The survey says digital literacy must also be a key consideration.

The survey says while smallholder farmers in rural areas do not have access to smart phones or Internet access, a basic phone is a good starting point in introducing the use of technology, through weekly SMS on prevailing market prices and best input bargains.

Furthermore, youths with a keen interest in agri-tech must work collaboratively with smallholder farmers to get a better understanding of their challenges and how to provide sustainable and affordable solutions.

“There is also need to capture data to provide evidence-based results on the immediate benefit and long-term impact of the use of technology by smallholder farmers,” the survey notes, adding that stakeholder engagement with the governments to provide access to land, tax waivers and fiscal policies that deliberately support youths in the sector should be a component of every programme.

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Butaleja farmers oppose govt ban on growing rice

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Farmers in rice gardens in Hisega Village, Butaleja Town Council, Butaleja District last week.

Farmers in Butaleja District have opposed the government’s decision of banning the growing of rice and other crops in wetlands across the country, saying they should have been consulted.
The farmers say the decision will affect their livelihoods and push them further into poverty.
Last week, the government banned the growing of rice and other crops in wetlands.

In a resolution passed by Cabinetand communicated by the Minister of State for Water and Environment, Ms Beatrice Anywar, the government said the move will restore the environment that has been degraded by farming activities.
Ms Anywar said Uganda’s wetland coverage has dropped from 17.5 per cent in the early 1990s to 8.5 per cent, while forest coverage has dropped from 24 per cent to 12.4 per cent.

Mr David Mulabi, a rice farmer and former contestant for Bunyole East MP,  last week said the decision is inhuman and one of the examples of the many discriminative and recklessly managed policy processes.
“The government has been giving out forests to foreigners to build industries. They have not said anything about urban encroachment on wetlands for home construction. Why target the poor farmers who have nowhere to go and have been farming in  these wetlands for over 50 years,”Mr Mulabi wondered.

He such a policy with a huge potential for social impact should have gone through long studies and consultations before its implemented.
Mr Mulabi said this could be another  government ploy to marginalise the rice farmers in the district, which is about 40 per cent covered by water bodies and wetlands.
“They j simply need to drop the whole thing and start afresh with proper policy consultation with a view of not evicting farmers but to get sustainable and practical solutions,” he said.

Mr Mulabi also accused government for giving a tax waiver to traders to import rice, something he said has led to price drop and has affected the farmers’ income.
“Instead of giving such money to our farmers to improve output, they supported foreign farmers at the expense of Ugandan farmers,” he said.
Ms Sarah Nagawa, another rice farmer, said the decision should be shelved, saying they earn their livelihoods from wetlands.

“These wetlands have paid for my children’s school fees including myself.They should think of better ways instead of taking decisions without consulting us,” he said.
Mr Abdu Walubya, a resident, said the district has  been depending on wetlands for farming.
“Almost 70 per cent of the homesteads of the population generate their income through use of these wetlands.Others live and sleep in wetlands. How will the government handle those who sleep and stay in wetlands, ”Mr Walubya said.
The district chairperson, Mr Micheal Higenyi Bory, said if the government takes over  wetlands without a clear plan, it will  lead to bloodshed.

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Raw deal for Sebei as Irish potato prices drop

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Farmers in Sebei Sub-region are counting losses following a drastic drop in the prices of Irish potatoes

Farmers in Sebei Sub-region are counting losses following a drastic drop in the prices of Irish potatoes.
A bag of Irish at a farm gate costs about Shs30,000 from Shs70,000 and a kilogramme goes for Shs300 from Shs700.
Farmers attribute the drop in prices to the Covid-19 disruptions, poor road network and the surplus harvest of Irish in neighbouring Kenya, which has now ended in the Uganda market.

In an interview with Daily Monitor at the weekend, the farmers said they were expecting to make fortunes out of the bumper harvest.
They have asked the government to start up a processing plant so that they can add value to the irish.
Mr Isaac Sande, a farmer in Chemonge Village, Kapchesombe, East Division in Kapchorwa District, said they were giving away their produce to middlemen.

“We are just dumping our produce because we don’t have any other alternative. We are making losses and yet we had anticipated better prices,” he said.
Mr Sande said this was the worst price they had experienced in a decade.
“I had invested about Shs3 million as part of a loan from a savings group, expecting to get Shs7 million, but this is now impossible,” he said.
Mr Satya Malewa, the vice chairperson of Kwoti Kapenguria Farmers Group, attributed the low prices to an influx of Irish from Kenya.

“Buyers would easily move here for potatoes, but it is now hard because of hiked transport costs,” he said, adding: “The government should provide us with soft loans.”
Mr Joshua Cherotich,a farmer in Kamakunga, Kapchesombe Sub-county, Kapchorwa District, said he is stuck with about 2 tonnes of irish.
“I invested a lot of money, but the middlemen are giving us peanuts. But by all means, I will give it away because it will rot,” he said.
Mr Joseph Mangusho, a resident of Benet Sub-County in Kween District, said the government should improve the transport network.
“We also don’t have warehouses from where we can store our Irish,” he said.

Production capacity
Ms Susan Chemutai, the secretary for production of Kapchorwa District, said the district produces between 400 and 500 tonnes of Irish potatoes per season.
Ms Everlyne Kubarika, the chairperson of Kapchorwa District, said Sebei Sub-region produces a lot of Irish, which if processed can lift the farmers out of poverty.
Mr William Chemonges, the MP for Kween County,  who also seats in the Parliamentary Committee of Science, Technology and Innovation, said they made a presentation to the line minister (on value addition for Irish) who will brief them next month.

“Our farmers face a major challenge of prices. We need a processing plant and machines that can transform the raw Irish into other products in powder form. The Irish should also be preserved for two to three years,’’ he said.

Original Source: Daily monitor.co.ug

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