The Oil Palm Development Association of Ghana (OPDAG), representing the entire palm oil value chain actors in Ghana, has appealed to the government to exempt palm oil from the implementation of the 50 per cent benchmark value Policy.
A statement issued in Accra by Mr Selorm Quame, Executive Secretary, said they were not advocating the complete abolition of the policy.
It said since the introduction of the policy in 2019, the impact was adversely affecting the local Palm oil industry.
The statement said the local refineries and Manufacturing industries were no longer viable to operate and the concomitant effect was the downstream of the values chain, which comprised the growers of oil palm; small and large, were losing their livelihoods as they could not sell their fruits.
“The refineries are unable to sell their products competitively against imported vegetable oil which has become cheaper as a result of the effect of benchmark value policy which in essence has subsidized the imports to the disadvantage of local producers,” it said.
The statement said the cost of a 25-litre jerrycan of vegetable oil produced locally was GHC260 ex-factory and sold on the market for GHC265 inclusive of the duty, levies, VAT and logistics.
“But the imported vegetable oil leaves the port at GHC230 and are sold to traders at GHC255 for onward selling on the market at GHC 260,” it said.
It said the sector was experiencing job and income losses, especially in rural areas, where local mills and smallholder farmers were actively engaged in the oil palm value chain.
A mill with 500 employees has downsized to 250 employees as of the beginning of 2021.
The statement said before the passing of the policy (50 per cent Benchmark Policy), the Association, together with the Ministry of Food and Agriculture and the Customs Division of Ghana Revenue Authority, were fighting the practice of undeclared vegetable oil imports.
According to the Association, the policy has legitimized under-invoicing, hence the flooding of the Ghanaian markets with subsidized and substandard vegetable oils.
It said estimates of the undeclared importation stood at approximate 6,000 to 7,000 metric tonnes per month and a loss in revenue through Tax evasion at an estimated Three Million dollars (US$ 3,000,000) per month.
On the impact on the economy, the statement said there would be loss of revenue to the State estimated at three million dollars per month and also the imported oil has a significant negative impact on the refining industry.
It said it would have a ripple effect on the value chain, including the thousands of farmers and their households, oil palm processors, allied services and their direct/indirect dependents in the value chain.
It said the issues made the industry unattractive to current industry players and not to mention new investors, both local and foreign.
The statement said the policy on Planting for Export and Rural Development would be in danger of not achieving its desired objectives and the achievement of the objectives of the Tree Crops Development Authority Act Act 1010, 2019) was also at risk.
The Association, therefore, called on the Government to exempt Palm Oil from the 50 per cent benchmark policy implementation to save the entire value chain from collapse.