‘Heavy tax on beef’

Prosper Ndlovu, Business Editor
ZIMBABWE’S beef industry is heavily taxed and Government needs to review downwards, streamline compliance costs to create room for growth in the sector and enable livestock farmers to realise high earnings.

The Zimbabwe beef sector study conducted by the Competition and Tariff Commission (CTC), reveals that the multiplicity of compliance costs are a major barrier to growth of the beef sector.

There is therefore a need to review the compliance/regulatory costs or levies downwards, the study recommends.

The $98.66 compliance cost per beast is relatively high and thereby discouraging farmers from investing in the beef industry.

The report further suggests that other levies or fees such as Agricultural Marketing Authority (AMA) registration fees should be scrapped while those by the Environmental Management Agency (EMA) should be a once off payment not an annual fee.

It suggests that Rural District Council (RDC) levy has to be reduced to a maximum of five percent from about 10 percent and that some of the levies should be channelled towards the purchase of vaccines of persistent animal diseases outbreaks like Foot and Mouth and Anthrax.

“Regulatory costs are an essential aspect of ensuring efficiency and high quality but if not properly administered might impact negatively on the beef industry.

The CTC notes that the high costs of compliance is adversely affecting livestock production as the costs are generally passed on to the farmer, either through direct deductions on the final price or indirectly through lower prices offered to the producer.

The regulators have said most of the costs are directed to abattoirs or buyers of cattle but the study notes that ultimately the burden is shifted to the ordinary farmer.

“The regulatory cost of $98.66 per beast is unsustainable and can actually negatively impact on the development of the beef industry,” reads the findings.

According to the study, a number of stakeholders consulted through interviews expressed concern over the regulatory or compliance framework in the country and decried high cost of feed, which limits production of quality beef.

Farmers are also worried about the recurrent outbreaks of FMD, which remains a major threat to cattle farming business as it compromises market value as buyers tend to suppress prices.

This results in loss to farmers. Livestock farmers also said the auction markets were prone to manipulation by cattle buyers who usually collude to `suppress’ competition and prices.

The farmers demanded increased visibility of officials from the Veterinary Service Department (DVS) in supporting and promoting cattle development and controlling in-breeding.

The study also shows that farmers  are concerned that their organisations are not playing their role in providing relevant market information, particularly bulletins of cattle prices.

Recommendations have been made for Government to increase support in cattle production by providing loans to buy bulls to improve cattle genetics while urgently facilitating resuscitation of the Cold Storage Company (CSC).

Abattoirs’ worry
Abattoirs have also complained over high regulatory costs and overlapping regulations that result in double taxation. They were of the view that there is no need for AMA to charge fees after DVS and public health inspectors have certified that plants are safe. Some of the fees need to be scrapped-off or significantly reviewed downwards to reduce the cost of doing business, reads the report. Other crippling factors cited by abattoirs include poor cattle quality as well as poor road and cattle marketing infrastructure.

Once a strong player in the industry, the CSC was also engaged during the study and revealed inherent challenges that include; lack of capital to revamp the company, high electricity charges affecting the operations and low off-take levels, which does not support the size of the giant beef processor.

Officials from the Division of Veterinary Field Services (DVS) and Livestock Production and Development (LPD), both under the Ministry of Agriculture, proposed that private sector be involved in the purchase of vaccines as well as a review of the grading system and the levies charged to farmers.

They concurred that most farmers generally lack information on cattle production and marketing and cited absence of coordination amongst themselves, which culminates in middlemen and buyers taking advantage.

The ministry officials blamed middlemen for playing a part in spreading FMD by disregarding cattle movement requirements.

“There is a need to invest into extension services development, that is, capacity building through re-training of extension officers so that farmers can acquire good animal husbandry skills,” reads the study.

Meanwhile, RDCs cited lack of coordination with other Government departments such as DLPD, DVS and ZRP on the conduct of cattle auctions. They accused these of clearing cattle without RDCs’ knowledge leading to revenue losses.