Ethiopia will permit the import of agricultural mechanization, irrigation and animal feed technologies, and equipment tax-free starting this week.
Eyob Tekalegine, State Minister of Finance wrote a letter to the Ethiopian Customs Commission listing a total of 45 agricultural mechanization, irrigation and animal feed technologies, and equipment items with their code numbers on May 6, 2019.
Some of the items include poultry tech equipment, honey processing machines, pesticides, surface or submersible generators and pumps used for irrigation.
The Agricultural Transformation Council Agency (ATA) and Agricultural Transformation Council in close collaboration with the Ministry of Agriculture and natural resources (MoA) initiated the tax reform policy by conducting systemic constraints of agricultural development, and recommended solutions in order to ensure sustainability and structural transformation and identified and listed the equipment to be imported tax-free.
“Farmers will have access to agricultural technologies which will ensure food security at the household and national level as well,” said Oumer Hussien Ministry of Agriculture.
The tax reform should enhance agriculture by removing duties and taxes on imports of farming machines, irrigation and drainage equipment as well as animal feed ingredients and technologies; thus providing incentives to invest in there importation and local production.
Policy makers and donor agencies in the agricultural sector have emphasized the use of modem farm technologies as a sole source of agricultural growth in Ethiopia. However, the cost of modern technologies is so prohibitive that few farmers in limited areas are using them.
Regarding the tax incentive, the government is giving attractive schemes for several local and international investors. In agriculture the government is providing tax and duty incentives but the number of investors is very limited and they contribute less than one percent to agriculture sector.
According to the information from Ministry of Agriculture, agriculture accounts for 34 percent of GDP and 71 percent of employment, including 12 million smallholder farmers.
The Minister of Agriculture and Natural Resources will have the mandate to license and supervise privileges, the letter reads.
“Allowing duty free for agriculture equipment by itself is not an end goal, access to adequate capital for agriculture is essential in addition to sharpening the structural barrier in the sector to achieve agricultural transformation and Millennium Development Goals and Sustainable Development Goals,” Demessie Chanyalew, an agricultural economist told Capital.