Agriculture stakeholders decry VAT imposed on hermetic storage bags

27Nov 2019
James Kandoya
Dar es Salaam
The Guardian
Agriculture stakeholders decry VAT imposed on hermetic storage bags

THE Tanzania Post-Harvest Management Platform (TPMP) has urged the government to remove Value Added Tax (VAT) charged to hermetic storage bags so as to curb post-harvest loss and aflatoxin in crops.

Hermetic storage bags are designed to protect farm produce against contamination by molds and pests. TPMP secretary Honesti Mseri made the call recently here at the Annual General Meeting that involved different stakeholders in the agriculture sector across the country.

Mseri said once bags are charged zero rate it will promote wide-scale manufacturing and utilisation of the technology especially thus storage expenses of crops, according to study conducted recently.

He said the study entitled An Economic Assessment of Government Incentives needed to Promote Wide- Scale Utilisation and Local Manufacture of Hermetic Storage Technologies (HSTs) was conducted early this year across the country by Talanta International.

The study on VAT was financed by AGRA in collaboration with ANSAF. 

He said currently, an average cost of the hermetic bags stands at 5,000/- which is expensive for majority of the farmers to afford. Mseri who is the head of programme at ANSAF, said the utilisation and manufacturing of hermetic storage technology (HST’s) is very low in the country, mainly due to affordability.

He said if VAT was to be removed, price of hermetic bags will drop by 18 percent, farmers will increase their demand from 103 bags to 154 bags, noting that the VAT removal will increase demand by 1.5.

“The current demand stands at 5 million hermetic bags, if VAT is removed, then demand will increase to 7.5 million bags,” he added.

According to him, the technology will help farmers to store their produce for a long time contrary to how it is now where sometimes they are forced to sell their produce at low prices for fear of crops’ decay.

The head of programme further noted that with new HST, farmers will be able to serve $11.2 per tonne due to storage loss reduction as a result of using hermetic bags.

“The choice of a storage method by farmers hinges on the price of the storage technology, its ability to maintain the quality of the stored product and its availability,” he said.

Besides that, the benefit which farmers accrues from using HST come from lower storage losses compared to not using HST and higher market value of the produce because of high quality and possibility to exploit the opportunity of selling the products when prices are better.

Others are lower or no costs of using storage pesticides, estimated losses at storage stage is equivalent to 8.4 percent (maize) upon using hermetic bags the loss is lowered by 5.6 percentage points (67 percent loss reduction).