Three main farmer-based organisations in Ghana have expressed disappointment at the government’s decision to suspend indefinitely the implementation of the benchmark value policy.
The Rice Millers Association of Ghana, Peasant Farmers Association of Ghana, and General Agricultural Workers Union said the decision had serious consequences on the survival of the local rice industry and appealed to the government to reconsider the indefinite suspension of the policy.
They said it was important government implemented its decision to reverse the benchmark value discount policy, particularly for rice, to save the hundreds of thousands of jobs that remain under threat of collapse in the rice sector.
On 13th January 2022, the Ghana Revenue Authority issued a communique, citing a directive from the Office of the President for the indefinite suspension of the implementation of the reversal of the benchmark value discount policy.
“The directive came as a huge surprise to rice farmers and millers because of the numerous engagements and consultations with all stakeholders for over two years after which the prudent decision to review the policy was reached and announced by the Honorable Minister of Finance in 2022 budget presentation in Parliament,” the organisations said in a joint statement.
The benefits that come with the implementation of the reversal of the benchmark value discount are not only limited to increased revenue for the government but also a fulfillment of the government’s own agenda of making Ghana self-sufficient in rice production by 2024.
It is also part of the industrial transformation agenda of the One District One Factory and Planting for Food and Jobs programmes.
Impact of benchmark value policy reversal on the Farmer-based organisations
They said the reversal of the policy would increase the competitiveness of the Ghana rice industry, create jobs and position the Ghanaian farmers and millers to be able to participate in the Africa Continental Free Trade Area as exporters of rice.
“The Benchmark value discount policy reversal is one good policy of the government that has the tendency to raise revenue to help address the various challenges facing farmers and improve the quality of rice produced and at the same time, protect the local farmers and millers against dumping from highly subsidized rice from the importing nations.”
The statement said the suspension of reversal of the benchmark discount policy was retrogressive and the fastest way of collapsing the local rice industry.
The impact on rice millers in 2019 after the announcement in April 2019 was devastating because by June of 2019 prices of imported rice in Ghana went down by some 20 percent forcing local rice millers to take a 15 percent to 20 percent price hit, eroding all margins that year.
Currently, the cost of imported white rice landed in Ghana after all taxes and charges are 25% cheaper than milled white rice produced in Ghana.
The relatively low landing cost of imported rice in Ghana is partly due to the 50 percent discount enjoyed by rice importers and partly due to dumping strategies from the exporting countries.
“We have the strongest belief that implementation of the reversal of the benchmark value discount policy on rice and investing the accrued revenue in subsiding farming and milling activities will reduce production cost and position the Ghanaian farmer and miller to produce and sell at a lower cost than imported rice over time,” it said.
About 100,000 persons who are directly engaged in rice value chain activities stand the risk of losing their livelihoods if the benchmark discount policy reversal is not implemented as planned.
The organisations said the country’s quest to be self-sufficient in rice production by 2024 would remain a mirage if rice imports continue to enjoy a 50 percent discount on import duties values as granted by this benchmark policy while local rice production faces high input costs and little or no support from the government for millers
The one million metric tonnes of milled rice that must be produced locally to make Ghana self-sufficient in rice production is set to create over 500,000 jobs in the economy and save over about US$500million of foreign exchange annually.