VAT on soyabeans affecting production
Tabitha Mutenga Staff Reporter
THE country’s 15 percent Valued Added Tax-j on soyabeans has been identified as one of the major challenges affecting soyabeans production.
Submissions: by the Zimbabwe Economic Policy Analys is and Research Unit (ZEPARU) to the CZI show that a farmer producing soya beans valued at $5 000 exceeds the VAT registration threshold and must, therefore, register and be charged 15 percent VAT for soyabeans sold.
“This negatively impacts on soya bean production and subsequently the whole value chain as it eats into the marginal profits of the farmer hence a disincentive for continued production and locks the country into import reliance. Even if the farmers are to pass it on to the consumers they cannot afford increasing the prices further given the cheaper imports from countries like Zambia,” the ZEPARU report said.
The Grain Marketing Board is currently buying soyabeans at $610 per tonne, while private buyers buy it for between $450 and $550 per tonne.
The soyabeans price had always been double that of maize until the maize price was set at $390 leading to a reduction in the price differential.
Initial indications for the 2018 harvest are that soyabeans production will be less than last year’s harvest of 30 000 tonnes.
The main reason for this was reported to be the expected high producer price for maize as the return from maize over soyabeans at the listed price is more than 30 percent, giving farmers an economic incentive to prefer maize over soyabean production.
With an industrial requirement of more than 120 000 tonnes, the deficit is expected to be imported from Zambia.
“The regulatory and policy environment does not support increased local soya bean production in the short, medium arid long term. Soyabeans is rated at 15 percent VAT in Zimbabwe’s customs and tariffs handbook. This is unlike hi the case of other primary agricultural products like vegetables, fruits, maize, wheat, rice, sugar beans and sorghum that are zero-rated,” another report by the Confederation of Zimbabwe Industries said.