High import tax frustrates dairy industry
Malawi Milk Producers Association (MMPA), the umbrella organisation for all the dairy farmers in the country, says it is concerned about the government imposed value added taxes (VAT) on the importation of dairy equipment.
The association has said the ‘punitive’ tax on dairy equipment is making it impossible for farmers to buy dairy equipment needed to bulk, cool and store the milk collected by the Milk Bulking Groups (MBG’s) in the country.
MMPA has since cast doubt on the success of ‘One cow per family’ initiative launched by President Joyce Banda earlier this year in the wake of prohibitive taxes on dairy machinery.
MMPA programme manager Herbert Chagona said in an interview yesterday that the present equipment, such as milk cooling tanks, being used by the farmers in the sector are dated back to the 1980s and are outdated and worn out.
He said because of their age, spare parts are not available and the tanks have become obsolete.
“In an attempt to remedy this situation, MMPA, with the help from the Flanders International Cooperation Agency [FICA] has acquired a number of milk cooling tanks from Holland that are meant to replace the present outdated tanks and to accommodate the growth of dairy production,” he said.
However, Chagona said upon arrival in Malawi, the Malawi Revenue Authority (MRA) slapped MMPA with approximately K2 billion (US$62.5 million) VAT on the shipment of four milk cooling tanks. He described the VAT as excessive, as the association cannot afford to settle the bill.
Chagona said such taxes are bound to increase the cost of replacement dramatically, adding that will put undue pressure on the farmers to be able to cool their milk for consumption.
He said high taxes on dairy equipment are contrary to what governments’ initiative to develop the dairy sector through Presidential Initiative for One cow per family and the nutrition programmes supported by United States Agency for International Development (Usaid) and other donors.
“Therefore, MMPA is calling on MRA to immediately exempt this equipment from taxes in the interest of the smallholder farmers and the consumers to make good on the promise to support and increase dairy production and battle nutrition deficiencies amongst the population of Malawi. We are calling on the authorities to please listen to this cry,” added Chagona.
On his part, Ministry of Finance spokesperson Nations Msowoya pleaded for more time to look into the concerns by the milk producers before commenting on the matter.
