Customs defies FG on tomato policy for greenhouse equipment

by | January 22, 2018 2:00 am

The implementation of a Federal Government policy to stimulate increase in tomato production has remained stalled since May 2017, as it appears the Nigerian Customs service has continued to disregard the policy which would have opened up investments in greenhouse farming, address the annual challenges faced in tomato production, including pests, diseases, erratic price fluctuations, and severe post-harvest losses.
The price-based measures for tomato policy, which took effect 30 days after April 7, 2017, stated that Greenhouse equipment is classified as Agricultural equipment and should attract Zero percent import duty. However, eight months later, the policy has remained comatose.
“The Greenhouse concession has not been respected by the Nigerian Custom Service,” said Emmanuel Ijewere, chairman Best Foods Limited, in an emailed response to BusinessDay enquiries.
“They (Customs service) still insist on a letter from the Federal Minister of Agriculture every time you bring in a shipment. Such letters take upwards of 3 months; meanwhile the green houses are accumulating demurrage that is usually far higher than the duty waived. Apparently this defeats the intention of bringing down the price of a green house. Actual it is now worse of,” said Ijewere, who is also vice president of the Nigeria Agribusiness Group (NABG).
A greenhouse is a structure with walls and roof mostly made from transparent material, in which plants requiring regulated climatic conditions are grown.
Special greenhouse varieties of certain crops, such as tomatoes, are generally used for commercial production. These structures range in size from small sheds to industrial-sized buildings. As they may enable certain crops to be grown throughout the year, greenhouses are increasingly important in the food supply of many countries such as Nigeria, where diseases and pests could wreak havoc to an entire season’s worth of food harvest.
Humphrey Otalor, marketing communications manager, Dizengoff Nigeria, which holds a significant market share in agricultural equipment imports, also corroborates the views of non-compliance by the customs service.
“Even after the Federal Government has announced the zero percent duty on greenhouse equipment, it is still yet to be implemented by the relevant government agency (Customs service), several months after.
“Therefore, importers of greenhouses are still required to pay the 20% duty outside the government mandatory 5%VAT, because of the simple excuse, that HS Code on greenhouses still attract 20% duty, and until it is corrected on the HS code, the Custom (asserts it) has the constitutional right to continue with the 20% charges,” said Otalor in an email to BusinessDay.
“Someone also brought in greenhouse equipment and was charged. Government has said what it wants, but it is not being effected,” said Africanfarmer Mogaji, CEO, X-Ray Farms by phone.
As Otalor noted, the additional charges are passed unto the end users (that is, Farmers). Invariably, most times, importers of greenhouses are constrained on the number of greenhouse to import every season, due to the heavy charges involved. Consequently, the quantum of production which ought to have been achieved takes a hit.
BusinessDay reached out to Joseph Attah, spokesperson for the Nigerian Customs Service, and in his response via text message, stated that “Green house is Zero percent, while prefabricated buildings are 20 percent. Some people bring the prefab in the name of green house. Green houses are strictly for agriculture, while the prefab houses have different usage in different circumstances.”
The tomato policy as it is called, was aimed at creating at least 60,000 additional jobs in fresh fruit production and processing, and as well increase local production of fresh tomato fruit required for fresh fruit consumption and processing into paste. These objectives however remain defeated on account of the impasse with the customs service even as Nigeria’s tomato production remains grossly inadequate.
If successfully implemented, experts say having more greenhouses would have increased local production of tomato for fresh consumption, production of concentrate for industrial scale, and of significance, reduce post-harvest losses.
Nigeria’s demand for fresh tomato according to the Agriculture Promotion Policy (2016 – 2020) is estimated at about 2.2 million metric tonnes per annum, while the country produces only about 1.5 MMT. Despite the supply gap, about 40 percent (equivalent to 700,000 MT) of fresh tomato is lost due to wastage. As part of ways to bridge the gap, the 2017 Tomato policy noted that, Nigeria imports an average of 150,000 MT of tomato concentrate per annum valued at $170 million.
Mogaji told BusinessDay, that “Even though it will take some time (to achieve sufficiency in production) because of the volume required, but over time the effect will become visible. We will see tomatoes for fresh market, and those farmers that produce in the North will focus theirs on processing. The earlier the customs’ disregard for the policy is settled, the better for the transformation being expected.”
As he explains, when more farmers can focus on producing tomato for industrial processors, it will even reduce traffic to places like Mile 12 in Lagos, as greenhouses will be taking care of fresh market.
With more production from farmers in the open field, “that is when the Dangotes and co can be profitable,” Mogaji said.
Otalor also stated that “if the Federal Government will ensure the implementation of this policy (zero percent on greenhouse), we will see more investors coming into greenhouse farming, thereby ensuring food security and economic growth.”