Despite removal of VAT, rice farmers complain about high price for spare parts

Though the government removed Value Added Tax (VAT) for inputs and equipment for the agricultural sector, rice farmers complained to Minister of Agriculture Zulfikar Mustapha that spare parts suppliers are still charging exorbitant prices.

As such, the farmers are hoping the government will rectify the situation. They also asked the minister for further support to help alleviate some of the woes they face.

See below full release from the Ministry of Agriculture:

Today, rice farmers from Regions Two, Three, Five, and Six met with Agriculture Minister Zulfikar Mustapha to discuss some of the issues faced in the industry.

While noting that most of their issues are a result of unfavorable weather and external economic impacts, the farmers wasted no time in calling on the government to intervene in what they consider price gouging by suppliers of spare parts.

The farmers noted that while the government has put systems in place, they are still paying high prices and, in some cases, VAT on spare parts.

“On the removal of VAT on spare parts, the government really do a good for us but the problem is we not feeling the effect. Everything raising. While these things are in place by the government the prices still high and growing every day. The issue is now between the government and the dealers because we know for a fact that the VAT is supposed to be deducted but its like its not. I bought a starter yesterday for $46,000. It used to be for $25,000. Look at the markup. Some of them still charging VAT. I have a receipt to prove it,” a farmer explained.

Furthermore, the farmers told the minister that the price for paddy should be standard in every region since all farmers are faced with the same issues.

While responding, Minister Mustapha explained that the government, since taking office has implemented a number of measures to assist farmers, the most recent being the $1 billion fertilizer assistance programme that was completed last year.

He noted that although farmers are requesting an across-the-board price for paddy from millers, the government cannot institute this because transportation cost plays a significant role in the price for paddy in certain regions.

“We will continue to engage the millers on prices but I cannot promise an across-the-board price for paddy. For instance, in Region Two, the price to transport will be more than in Region Five so in order for millers to earn they take those factors into consideration. You know for a fact last year we were able to negotiate with millers from Region Two for better prices for farmers and now you are getting up to $4,000 per bag,” Minister Mustapha explained.

As it relates to prices for spare parts, Minister Mustapha said that the government has made its policy clear and that VAT is no longer applicable to inputs and equipment for the agriculture sector and assured the farmers that he will engage the Guyana Revenue Authority on the matter.

Shortly after assuming office, President Dr. Irfaan Ali announced the removal of VAT and duties on machinery and equipment to allow for the recapitalization of key sectors which includes mining, forestry, agriculture, and manufacturing. This is coupled with the granting of tax concessions for mining, forestry, manufacturing, and agriculture.

The minister also reminded the farmers that since taking office, the government has spared no effort to ensure farmers benefit from assistance to cushion the hardships faced.

“Most of the issues faced in the sector, we have to work together to resolve them. The weather hasn’t been favourable but we are working to strengthen our infrastructure. We are building new pump stations to assist with drainage. We are building new farm-to-market roads, and rehabilitating dams so that you can access your fields. We’ve been working to enhance the drying facilities that we have across the country. We rehabilitated the one at Black Bush Polder so that will be in place for the next crop. The one at MMA; we’ll increase its production capacity from 2,000 bags to 50,000 bags. We’re also working to rehabilitate the Leguan facility. We are constantly engaged in bilateral discussions to source cheaper fertilizers and we are also still engaging the Panamanian officials to get those outstanding payments owed to millers. So, we are working but we need your input and cooperation,” he said.