Absence of HS Code for greenhouses shows tomato policy weaknesses

by | January 24, 2018 1:42 am

The Federal Government recently enacted a tomato policy to spur local investments in the subsector, boost the production of fresh fruits and vegetables while halting the importation of tomato concentrates into Nigeria.

Under the policy, the government banned the importation of tomato paste, powder or concentrates for retail sales, as well as preserved tomatoes. It also increased tariff for tomato concentrate from five to 50 percent, in addition to $1,500 per metric ton payment.

This, according to the government, is targeted at reviving the tomato subsector and stimulating economic growth, while creating jobs.

The policy also includes the classification of greenhouses as agricultural equipment, attracting zero percent import duty. This is meant to boost farmers’ productivity in fruits and vegetables production.

But since the implementation of the tomato policy in May 2017, the Nigerian Customs is yet to create an HS code for greenhouses as an agricultural equipment to attract zero import duty as importers of the product still pays a 20 percent duty owing to the slowness of the policy to take effect.

Key players say that the impact of the policy is yet to take effect due to the ineffective implementation of the policy, noting it as the major problem affecting the country’s economic growth and development.

“We imported some batches of greenhouses into the country and we paid a 20 percent import duty on it despite the introduction of the zero import duty on greenhouses in the recent tomato policy the Federal Government enacted in May, 2017,” said Humphrey Otalor, head, corporate communications, Dizengoff Nigeria in a telephone response to questions.

“The Nigeria Customs is yet to introduce a new code or change the tariffs under the Aluminium structures where greenhouses are grouped under,” Otalor added.

According to experts, Nigeria can only boost its fruits and vegetable production if the country has a policy life cycle, where every player in the industry is carried along, saying that greenhouse technology is a major way farmers can increase production and tackle the issues of pests and diseases. They add that such provides them the opportunity to control their farming environment.

Dokun Ogunbodede, managing director, Sedfort Limited, said that the country would only benefit from the tomato policy when there is a serious effort from the government to see the policy through.

“This is a question of credibility on the part of the government. I made my investment decisions based on the tomato policy pronouncement last year by the government and it has affected me,” Ogunbodede, who also imports and sells greenhouse equipment, said.

“This is not good for the tomato industry and it shows the Federal government policy implementation lapses. Also it shows that there is no coordination among the various ministries,” he added.

The Nigerian Customs is yet to create an HS Code for greenhouses, as it is still classified as fabricate equipment with code 7610.9000.00 on the its website, attracting an import duty of 20 percent, including a five percent Value Added Tax (VAT).

Responding to BusinessDay’s questions on the greenhouse HS Code, Nkiruka Ijeoma Nwala, public relations officer, Nigeria Customs, Apapa Command, said: “If there is any change of policy, Customs will act on the written document presented to us. The tomato policy document was given to the Nigerian Customs with a letter of condition stating that importers of greenhouses must get an authorised letter from the Federal Ministry of Agriculture recognising them as farmers and stating that the greenhouses fall within the specified specification.”

“Not all greenhouses are qualified for the zero import duty, so it is not about creating an HS code,” Nwala said.

Nigeria currently produces 1.5 million tons of tomatoes per annum, with 0.7 million metric tons post-harvest losses. Tomato demand in Nigeria is put at 2.2 million metric tons per annum, leaving a gap of 700,000 metric tons, according to official data from the country’s Agricultural Ministry.

Nigeria is the 13th largest producer of tomatoes in the world and second after Egypt in Africa, yet the country is the largest importer of tomato paste globally as the country is still unable to meet local demand.

According to industry data, Nigeria is said to import an average of 150,000 metric tons of tomato concentrate per annum at a staggering value put at $170 million.

Currently, billions of naira worth of investments made in the tomato subsector have been abandoned and the lack of effective implementation of the tomato policy is stalling the hope of having a fully integrated paste and concentrate maker in the country, as the country’s only tomato processor is shutdown owing to insufficient supply of tomatoes.

The Dangote Tomato Processing Factory, which is the only paste and concentrate manufacturer in Nigeria, needs about 40 trailer loads of fresh tomatoes daily, which is equivalent to 1,200 tons for production.

But with greenhouse technology, farmers can double their yield per hectare, which is currently at an average of 15-20 tons per hectare to about 30-40 tons per hectare and farm all year round instead of depending on rain-fed agriculture.

Greenhouses have also helped farmers in managing the challenges of degraded land and decreasing land sizes, while allowing them to farm all-year round under standardised conditions.

Efforts to get response from the Federal Ministry of Agriculture and Ministry of Trade and Investment did not yield any results.

The policy also includes the restriction on the importation of tomato concentrate to the seaports to address the abuse of the ECOWAS Trade Liberalisation Scheme (ETLS).

There is also the inclusion of tomato production and processing on the list of industries eligible for investment incentives administered by the Nigeria Investment Promotion Commission (NIPC).


Josephine Okojie