Taxes, levies roast beef producers
By Shame Makoshori, Senior Business Reporter
Beef reported the sharpest price hikes during the September 2017 price hike frenzy, which intensified in the aftermath of the political upheavals that brought Mugabe down.
A RAFT of punitive taxes and levies on beef farmers charged by at least six State agencies are behind sharp rises in the cost of meat, whose price also escalated during a spike in prices last year, an analysis done by business for the government revealed last week.
The Zimbabwe National Chamber of Commerce (ZNCC), which presented a six-page investigation into the crisis to Vice President Constantino Chiwenga, blamed the steep price hikes on pressure exerted on beef farmers by State agencies to pay high fees and levies, or face punitive action.
Zimbabwean beef, chicken and egg prices are now ranked among the most expensive in southern Africa, according to multiple reports obtained by The Financial Gazette.
Markets had expected that a change of guard in government in November last year would calm jittery markets and stabilise volatile prices.
But in the aftermath of the dramatic military action that triggered the abrupt departure of former president Robert Mugabe, the price of one kilogramme of economy beef rose by 100 percent to about $8, from about $4 before September 2017.
During the week when ZNCC submitted its paper to Chiwenga, economy beef cost $4 in Zambia, $3 in Pakistan and $6 in Argentina.
A crate of eggs cost $6,75, compared to $1,25 in Pakistan, $1,50 in Argentina and $3 in Zambia, the paper said.
A chicken costs $7 in Zimbabwe, almost three times higher than in Zambia, and almost three times more than $2 in Pakistan, said ZNCC.
Zimbabwe’s second largest business lobby warned Chiwenga against creating more “corporate tombstones” through price controls.
The paper demonstrated how levies and taxes charged by State agencies were devastating the economy, affecting consumers whose erosion of purchasing power has been worsened by high unemployment.
ZNCC slammed “greediness” for the price hikes.
Beef reported the sharpest price hikes during the September 2017 price hike frenzy, which intensified in the aftermath of the political upheavals that brought Mugabe down.
The Zimbabwe National Statistics Agency said last week annual headline inflation rose to its highest level in more than five years to 3,46 percent in December, representing a 0,49 percentage gain on the November figure of 2,97 percent.
The Zimbabwe Republic Police (ZRP), the Ministry of Health, Environmental Management Authority (EMA), the Agricultural Marketing Authority (AMA), the Division of Livestock Production and Development (DLPD) and rural district councils (RDCs) generated about $50 million from taxes, fees and levies from the beef industry in 2016 and 2017, according to ZNCC and Commercial Farmers Union statistics.
“There are about five legislations which govern the beef industry, the beef industry is regulated by six government departments,” ZNCC told Chiwenga.
“The government departments are meant to assist in the development of the beef industry. But to the contrary, these have increased administration costs…through duplication of fees and processes. For instance, abattoirs are obliged to pay annual registration fees to AMA and concurrently pay department of livestock and veterinary services and annual environmental impact assessment fees (to EMA), which are viewed as punitive. Compliance costs per beast amount to almost $100, which is unsustainable for the sector. Almost all these costs are ultimately borne by farmers because abattoirs will shift the burden to them through suppressing prices. This is raising the prices of final beef output,” said the paper.
Ultimately, the cost of producing one beast rises to $408,05 after adding other expenses, according to ZNCC.
Farmers said there had been cases where small scale beef producers had been paid less than $200 per beast.
The ruling ZANU-PF party has tasked Chiwenga to lead efforts to find solutions to the price hikes. In October, government inflicted more pain to the industry after introducing fresh levies through Statutory Instrument (SI) 129 of 2017.
It caused an outcry from the Livestock & Meat Advisory Council (LMAC).
“All registered cattle abattoirs (will) be charged $10 per animal, all registered milk processors (will) be charged one cent per litre, and all registered chick producers (will) be charged one cent per chick…Stakeholders in the livestock value chain are surprised by the announcement of the new SI levying the livestock sector at a time when the Office of the President and Cabinet is in the process of negotiations to reduce the regulatory costs by at least 50 percent,” LMAC said.
“LMAC has already approached the Ministry of Agriculture to consider a freeze in the implementation of this SI,” the statement said.
Tempers have been flaring over the price hike madness.
Pockets in government have blamed business for trying to undermine the new administration.
But in its paper, ZNCC asked government to review the State agencies’ roles and merge some of them.