Players in the oil palm industry have expressed fears that the Ghana Revenue Authority’s decision to maintain and continue implementing the 50 percent benchmark value on palm oil imports is severely hampering the development of local content – collapsing businesses and leading to job losses.
President of the Oil Palm Development Association of Ghana (OPDAG), Samuel Avaala, noted that before introducing the benchmark value, a 25-litre (yellow gallon) of oil produced locally was selling at GH¢145 against GH¢150 for the imported product. However, after the policy was introduced, the locally produced vegetable oil was still selling at GH¢145 while the imported products started selling from GH¢110.
“This development is affecting local players in the industry, as refineries continue to shut down and lay-off workers; a greater number of farmers have also found their way out of business as a result of the sector’s dwindling fortunes,” he said.
Mr. Avaala noted that the sector’s entire value chain has been negatively impacted by the benchmark valuation policy. The association, he said, wants government to as a matter of urgency exempt the sector from the benchmark valuation as a way of safeguarding continuous existence of the sector and guaranteeing economic livelihoods for the tens of thousands within the oil palm value chain in country.
“The Benchmark Valuation Policy has virtually brought the sector to its knees coupled with the outbreak of the Coronavirus pandemic; the association fears the worst for the industry. No matter what, we will sustain the conversation on this matter as it affects many lives. We want the finance minister to say something positive about this in the budget review that the country is expecting due to COVID-19,” Mr. Avaala said.
Last month a letter purported to have come from the GRA that exempted oil palm from the policy was declared as fake.
Ghana is the third-largest producer of palm oil in West Africa after Nigeria and Ivory Coast. Domestic consumption of palm oil in refined form is about 300,000 metric tonnes per annum, valued at GH¢1.3billion. Current local production stands at 150,000 metric tonnes, whereas imports stand at 420,000 metric tonnes per annum, valued at US$271million.
The local oil palm industry also employs about 50,000 people directly at plantation level. With local demand estimated to reach 775,000 metric tonnes by 2023, players are calling on government to support the sector so the industry can utilise its full potential to support the economy.