In the past two weeks, social as well as mainstream media were awash with unprecedented inflation of prices of fertilizers among other important products and services.
The unforeseen hike prompted debates among concerned citizens and the major question that emerged from many has been, was justice done? Dialogues are still spreading like wildfires and it appears that they may not stop soon.
While all else was in different roundtables there was little attention given to the 2 per cent non-final withholding tax imposed to suppliers of agro-products, livestock, and fisheries when supplied to processing industries, millers and other Government Agencies, that was passed just a month ago by the parliament.
The gravity of effects that this tax will cause is unmatched and it seems sweet wording of this part of the speech act as a veil to many readers.
The new tax promised to work on traders who supply crops to millers but the ramifications of it will soon start to be felt among farmers and not anyone else.
Traders who directly buy from farmers will likely opt to protect their profit margin by lowering their buying price rather than struggling to inflate their selling price – that is the easiest thing to do – this will badly hit the producing community while preserving the luxuries of those belonging in the value chain’s top echelon.
All this happens when a farmer will need to dig deeper in her pocket if she will need to modernize her farming practice by employing proper methods like using modern inputs such as industrial fertilizers, thanks to, again, the recent increase in the price of fertilizer which according to multiple sources, its price has already taken a hike from around 50,000 Shillings to more than 90,000 Shillings per bag – an 80 per cent increase.
Someone can choose to play a devil’s agent role by predicting a considerable decline in productivity in the coming season and maybe partly right. The only thing that might increase production (note: it is the production and not productivity) might be employing the unsustainable common method of expanding the area of cultivation as opposed to the highly advised way of increasing production per acre.
In the past year, I have been using this space to write several issues transpiring in this good sector of ours, trying to share what is happening and how we can get better than this. I am thankful that, beyond expectation, it has never been a monologue as one might imagine, responses from readers have provided me with a rare opportunity to learn more and they have been a leading source of energy to do more.
One reader by the name Athanas Rudolf Meixner, a Catholic priest from Germany, having read one of my pieces here that were to be re-published later by Business Standard – an international magazine reputed for business news – out of excitation sent me an email sharing his global understanding in the sector.
One catchy phrase by this revered monk that has been repeating in most of our conversation and lives rent-free in my mind is this, “There is no country in this world which supported her farmers substantially and remained poor”.
These words which kept on resonating in my mind, save for minor grammatical errors, could not be truer.
We so often praise the Industrial revolution that Britain took the lead and largely honour the machine's inventors – in the sixteenth century by inventing textile machines that could weave several clothes in few hours as opposed to hand weaving that took many days – but little do we know that the “architects” of this glorious historical fact were farmers who after obtaining great support from the Monarchy made the country different from others in the European continent like Germany and Russia and the world at large.
But what the Monarchy did was not rocket science, all they did was to make sure that English farmers would no longer be subservient of the feudal lords and merchants but the equal players in the agriculture value chain.
These farmers were able to dictate which crops should be imported for industrial use and what not depending on their capacity to produce. One can hardly imagine an incentive bigger than this.
Whereas debates are raging from every corner of the country, many trying to figure out how this budget caught us by surprise, lest we forget that there is a group of players in the sector whose justice was not well served in these developments.