- emergency budget to address some of the issues faced by agro-processors
During a virtual meeting earlier today with officials from the Guyana Manufacturing and Services Association Limited (GMSA), Agriculture Minister, Zulfikar Mustapha reiterated Government’s commitment to improving the agro-processing and micro enterprise industries.
While reflecting on several announcements made by His Excellency, Dr. Irfaan Ali, Minister Mustapha said that the reversal of several taxes to items and machinery involved in the agriculture production chain will see the cost of production for many agro-processed products significantly reducing.
“Yesterday, His Excellency disclosed that this four-month emergency budget will see the removal of Value Added Tax (VAT) to items such as water and electricity, tax concessions for agriculture and the reversal of an increase to land lease fees. We will also be removing VAT from exports, construction materials, seeds,pesticides and agro-chemicals,” Minister Mustapha said.
Minister Mustapha further stated that with these immediate interventions, persons involved in agriculture will benefit from an overall decrease in their cost of production.
President of GMSA, Shyam Nokta during the meeting said that he is pleased with these immediate interventions. He also shed some light on some of the challenges faced by members of the Association.
“Basically, the challenges faced in the agro-processing sector are cost of production, financing, legislation, marketing as well as market access, technology and technical knowledge and enabling agencies an ease of doing business. For our agro-processors and small micro-enterprises to meet their full potential, there needs to be some level of Government’s intervention to better address issues such as access to raw materials, energy, taxation and some amount of improved research and development in areas of processing techniques and technology,” Mr. Nokta said.
In responding to those concerns, Minister Mustapha said that the emergency budget was developed to immediately address many of the Government Manifesto’s promises, for example, lowering of the overall cost of production of agro-processed items. He added that it is the vision of the Government to tap into additional international markets and benefit from funds generated from international food import bills.
“Guyana has somewhat of a large food import bill. We are still a developing country. The import bills of other developing and developed countries are far larger. I do believe our products have the potential to shine on the world market. Government is working to put the necessary systems in place to ensure our products meet international requirements and standards. This will allow our agro-processors and small micro-enterprises to have their products added to the list of food imported by these countries, thus benefiting from funds from those import bills” Minister Mustapha said.
The GMSA President also said that from the association’s standpoint, there should be a greater push for access to financing by agro-processors from Government initiatives under agencies such as the Small Business Bureau (SBB).
“The SBB should also include monitoring and capacity development, in addition to financing. There should also be some sort of Government led lending facility that provides affordable access to financing and exhibits tolerance to the risks in agro-processing,” Mr. Nokta said.
GMSA Executive Board Member, Raymond Ramsaroop, pointed out that even with the passage of the Food Safety Bill, there is a big gap with the export of fresh produce.
Minister Mustapha informed Mr. Ramsaroop that the Ministry is working to formally establish its Food Safety Department.
“Even though this Department was established, there was no proper system in place for the effective functioning. Government is now looking to establish and make budgetary allocations for the department to function,” Minister Mustapha said.
The subject Minister also noted that over a period of time, it is Government’s desire to establish an agro-processing facility. This, he added will see government engaging farmers to get involved in ‘cluster farming’ so that they would have the capacity to supply such a facility through contractual farming arrangements.
Mr. Ramsaroop, in offering his support, said that such an initiative can be a public-private initiative.
“Although government may start with a public-private partnership, the initial investment could be from Government with an appropriate exit agreement developed for Government over time. A model of such a facility exists in Belize and when you are ready to move forward with these plans, a visit to Belize would assist greatly with establishing a successful plant of that nature in Guyana,” Mr. Ramsaroop said.
Minister Mustapha also informed the team that additional incentives can be expected for the further development of the sector in subsequent national budgets.