Taxes on agricultural inputs push up cost of fertilisers

A farmer buys seeds and other agro-inputs from a dealer in Iganga. Fertiliser usage in Uganda is one of the lowest globally because majority of Ugandan farmers are resource-constrained. FILE PHOTO

What you need to know:

Taxes. The Withholding tax of 6 per cent and 18 per cent VAT, contribute to high fertiliser prices.

Kampala. The Ministry of Agriculture Animal Industry and Fisheries has said the cost of fertiliser in Uganda is 10 times higher than international prices, something that is reducing the use of fertilisers locally.
Government imposed taxes on agricultural inputs as it tries to expand the country’s tax base. The commissioner for crop protection in the Ministry of Agriculture Animal Industry and Fisheries, Mr Komayombi Bulegeya said the high cost of fertilisers in the local market is associated to the tax slapped on the input directly and indirectly.
The Withholding tax of 6 per cent and 18 per cent VAT, he said, all combined together contribute to high fertiliser prices in Ugandan market.
Speaking during a workshop last week in Kampala, Mr Komayombi said: “The cost of transporting fertiliser from Mombasa to Kampala is $140 (Shs419,300) per tonne by road compared to $50 (Shs149,750) per tonne when transporting it by railway. Meanwhile, the price of fertiliser in Ugandan markets is 10 times higher the international market prices.”
Mr Komayombi said the price of 50kg bags of fertiliser ranges from Shs100,000 to Shs150,000 in the local market, translating to between Shs2,000 and Shs3,000 per kg.
“The price of one kilogramme in the international market is just Shs300,” he said.
Mr Komayombi explained that the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) in the recent past acknowledged the need for increased fertiliser use in order to address the problem of declining soil fertility to increase crop production, and food security as well as household incomes.
He said fertiliser usage in Uganda is one of the lowest globally because majority of Ugandan farmers are resource-constrained, with very low capacity to afford inputs like fertilisers.
“Currently, use of fertiliser in Uganda is very low (at about 1 kg of nutrient per hectare per year) and the situation is exacerbated by challenges of poor fertiliser quality on the market. Some farmers who have tried out fertilisers claim they do not fully realize the anticipated benefits from fertiliser application,” he said.

Fake inputs
Uganda is a net importer of fertilisers from overseas, something associated to high transportation and faking of the products.
“They claim that the losses they experience are as a result of using counterfeit farm inputs including fertilisers,” he added.
He said the country imports 50 million tonnes of fertiliser annually of which 90 per cent is used by the large plantation estates.

Comparing fertiliser usage in africa

Giving a comparison how Uganda is fairing in fertiliser usage in Africa, Mr Komayombi said Uganda ranks lowest at 1 to 2 kg per hectare, Rwanda 29kg per hectare, Kenya 35 kg per hectare and South Africa 58kg per hectare. Currently, crop yields in Uganda are at 30 per cent below the potential.

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