GUTA’s posture on the 50% Benchmark Policy will kill some local industries – OPDAG

The Oil Palm Development Association of Ghana (OPDAG) have pleaded with the government to review the 50% reduction benchmark policy introduced by the Ghana Union Traders Association (GUTA).

Below is the full release from the outfit:

We the Oil Palm Development Association of Ghana (OPDAG), being the entire palm oil value chain actors in Ghana, are pleading with the Government to REVIEW the 50% Reduction benchmark Policy by exempting palm oil from the application of the policy – we are not advocating a complete abolition of the policy as being portrayed by Ghana Union of Traders Association (GUTA).

The leadership of GUTA is spreading falsehood to deter the Government from reviewing the policy.

Since the introduction of the policy in 2019, the impact is adversely affecting the local Palm oil industry.

The Local refineries and Manufacturing industries are no longer viable to operate and the concomitant effect is the downstream of the values chain which comprises the growers of oil palm – small and large are losing their livelihoods as they cannot sell their fruits sooner rather than later!.

The refineries are unable to sell their products competitively against imported vegetable oil which has become cheaper as a result of the effect of above policy which in essence has subsidized the imports to the disadvantage of local producers.

For example, the cost of a -25-liter jerry can of vegetable oil produced locally is costed GHc 260 ex-factory price and sold on the market for GHc 265 inclusive of the duty, levies, VAT and logistics. But the imported vegetable oil leaves the port at GHc 230 and are sold to traders at GHc 255 for onward selling on the market at Ghc 260.

This means GUTA, is not actually fighting for traders but a handful of importers who are making huge profits while Ghanaians are at the risk of losing jobs and subsequently livelihoods at the downstream where hundreds of thousands of rural smallholder/outgrower farmers operate.

The sector is experiencing job and income losses especially in rural areas where local mills and smallholder farmers are actively engaged in the oil palm value chain. A mill that had 500 employees has down sized to 250 employees as at the beginning of 2021.

Prior to the passing of this policy (50% Benchmark Policy) the Association together with the Ministry of Food & Agriculture and the Customs Division of Ghana Revenue Authority was fighting the practice of undeclared vegetable oil imports. This policy has legitimized under-invoicing. Hence the flooding of our markets with subsidized and substandard vegetable oils.

Estimates of the undeclared importation (not conforming to regulatory standards) stands at approximate 6,000 to 7,000 metric tonnes per month and a loss in revenue through Tax Evasion stands at an estimated Three Million dollars (US$ 3,000,000) per month.

THE IMPACT

• There is loss of revenue to the State (estimated Three Million dollars (US$ 3,000,000) per month).
• The imported oils have a significant negative impact on the refining industry and a ripple effect on the value chain including the hundreds of thousands of farmers and their households, oil palm processors, allied services and their direct/indirect dependents in the value chain.
• The above issues have made the industry unattractive to current industry players and not to mention new investors (Local and foreign).
• The policy of Planting for Export and Rural Development (PERD) will be in danger of not achieving its desired objectives.
• The achievement of the noble objectives of the Tree Crops Development Authority Act 9Act 1010, 2019) is also at risk

WE ARE CALLING ON THE GOVERNMENT TO EXEMPT PALM OIL FROM THE 50% BENCHMARK POLICY

IMPLEMENTATION IN ORDER TO SAVE THE ENTIRE VALUE CHAIN FROM COLLAPSE

LONG LIVE GHANA

LONG LIVE THE LOCAL PALM OIL VALUE CHAIN

Mr. Selorm Quame

Executive Secretary