ZAMBIA National Farmers Union (ZNFU) has urged Government to zero-rate on wheat flour, bread, stock feed inputs and agricultural equipment for value added tax (VAT) to reduce the food price.
In its 2012 budget submission, ZNFU says the VAT zero-rating of the commodities will result in the price reduction of the products and stimulate demand among the majority of the population falling in the low-income groups.
The submission made to the Ministry of Finance and National Planning in Lusaka last Friday states that decline of prices will have a direct positive effect on the overall economy through the decrease in the food consumer price index.
“Additionally, there will be a direct positive effect on the overall economy through the decline in the food consumer price index which will contribute to reducing inflation, improving food security and reducing poverty,” it said.
The Union says Zambia will in the long term benefit from the investment in wheat production to enable the country become a net exporter of wheat products, thus taking advantage of the regional integration process.
ZNFU says the overall impact of the measure will make wheat and wheat products cheaper and more affordable in the domestic markets and improve their competitiveness against imports.
On the role of the private sector in the agriculture sector, it submits that the private sector plays a pivotal role, hence the need to put in place policies that will stimulate the sector by improving the competitiveness of agriculture which should include reducing the costs of production.
It says this will significantly improve competitiveness of the sector and pave way for exports and create conducive conditions for rapid investment.
“The performance of export crops such as tobacco and cotton has also improved after taking a dip. With these positive developments, Government should consider putting in place deliberate measures to improve the competitiveness of agriculture for exports to flourish,” it said.
It notes that the 2012 national budget provides the government with an opportunity to start addressing the attainment of the objectives of the Sixth National Development Plan having made strides in achieving national food security with focus shifting towards agriculture diversification and sustainable growth for exports.
The benefits anticipated include sustainable growth of the agriculture sector since it is expected to become more competitive, increased revenue contributions to the treasury through corporate taxes as farm profitability improves, employment creation and generation of higher incomes.
[Zambia Daily Mail]