By Prossy Nandudu
Uganda Seed Traders Association (USTA) are petitioning the ministry of finance to reconsider the taxes levied on agricultural in puts, seeds and agriculture finance saying the taxes will make exports uncompetitive and affect local food crop production.
They also said that taxing basic agricultural inputs as proposed in the 2013/2014 budget will in the short run negatively affect the entire economy.
In a statement issued by the association, seed traders say that because of the higher input costs: fertilizers, seeds, equipment, there will be less input use, thus lower yields expected.
trueWorkers in one of the grain industries. PHOTO / Prossy Nandudu
“Lower yields will result into food shortage. Higher food prices disable exports due to un-competitiveness and lead to less foreign currency inflows,” said the statement.
For the past 10 years, the agriculture sector has experienced tremendous growth due to increased access to improved certified seeds, improved inputs and access to markets.
Studies show that the average adoption of improved seed, fertilizers and modern pesticides by smallholder farmers for production ranges from 10-25%, being very low in the region.
The seed sector was liberalized in 1994 and grew over years from 2000 metric tonnes to the current 12000 metric tonnes.
The total sector is estimated at 20 million USD turn-over and classified in 2 types of seeds which include the agricultural seeds, with an estimated sales of 13.000.000 USD, mostly locally produced, using NARO research results, bulk, condition and made available to farmers and Horticultural seeds, with an estimated turn-over of 7.000.000 USD, mostly imported.
The current direct tax contribution by the seed sector is estimated to be over 1.000.000 USD, but the macro economical impact is huge and regional exports alone for cereals in 2012 exceeded 150 million USD last year.
Seed traders petition finance minister over taxes