Proposed budget to hit dairy sector
Friday, 18 June 2010
FE Report
Pran-RFL Group, country's largest agro-processing company Thursday said some of the proposals of the new budget will adversely hit the dairy sector.
"The proposed reduction of import duty on powdered milk is definitely a blow to our industry," the company said in its budget reactions. The proposed budget 2010-11 reduced the import duty from 12 per cent to 5 per cent and the regulatory duty from 5 per cent to zero per cent.
"This will encourage import of powder milk which is already quite significant," the company said. Presently there is no VAT on liquid milk, ghee, butter, cheese etc.
The removal of supplementary duty on imported powdered milk in repacking stage (from bulk to retail pack) at 2.5 per cent will reduce retail prices of imported powdered milk.
Dairy sector, a major source of nutrition for our malnourished population, is a source of bio-gas (methane) which is renewable energy & importantly so in areas not connected to the main grid.
The sector provides organic fertilizer for our depleted soil as a byproduct besides providing valuable raw material for leather and other industries.
Livestock currently contributes 2.79 per cent of the GDP and the export of leather and leather goods alone contributes 4.31 per cent of total export earnings.
The removal of tariff value during production stage for payment of VAT on flavoured Milk (Mango, Banana, Chocolate, Yogurt etc) which are all based on liquid milk will increase VAT on retail pack of these products by more than 60 per cent.
"This will push up prices of these liquid milk-based products in the market to the detriment of local milk production," the Pran Group said. The company demanded exemption of 3 per cent VAT at trading stage for liquid milk from the present 1.5 per cent for all dairy products, like rice, as it is a major source of nutrition for children.
The proposed taxes will discourage dairy development particularly when this sector was trying to come up in tandem with other agricultural sectors which have made significant progress.
It will also discourage employment generation in non-urban rural areas. "More than Tk 40 billion have been kept reserved in the budget as subsidy to the agriculture sector but the dairy sector does not enjoy any similar facility," the reactions said.
"The imposition of supplementary duty (SD) at 10 per cent on fruit juice is clearly are unjustifiable as it does not fall within the purview of SD which is only justifiable on grounds of being "luxury item, non-essential & socially undesirable".
Recently the government brought these drinks under the purview of Tariff Value to keep prices within bounds & thus encourage consumption. This move of imposing SD will nullify the government decision and enhance prices.
"Entrancement of tariff on main raw material of fruit drink from Tk. 4 to Tk. 6 per kg will affect the retail price of fruit juice." "The proposed budget does not enhance or impose any additional duty on non-organic carbonated beverages which are discouraged in many countries," the statement added.
Pran-RFL Group, country's largest agro-processing company Thursday said some of the proposals of the new budget will adversely hit the dairy sector.
"The proposed reduction of import duty on powdered milk is definitely a blow to our industry," the company said in its budget reactions. The proposed budget 2010-11 reduced the import duty from 12 per cent to 5 per cent and the regulatory duty from 5 per cent to zero per cent.
"This will encourage import of powder milk which is already quite significant," the company said. Presently there is no VAT on liquid milk, ghee, butter, cheese etc.
The removal of supplementary duty on imported powdered milk in repacking stage (from bulk to retail pack) at 2.5 per cent will reduce retail prices of imported powdered milk.
Dairy sector, a major source of nutrition for our malnourished population, is a source of bio-gas (methane) which is renewable energy & importantly so in areas not connected to the main grid.
The sector provides organic fertilizer for our depleted soil as a byproduct besides providing valuable raw material for leather and other industries.
Livestock currently contributes 2.79 per cent of the GDP and the export of leather and leather goods alone contributes 4.31 per cent of total export earnings.
The removal of tariff value during production stage for payment of VAT on flavoured Milk (Mango, Banana, Chocolate, Yogurt etc) which are all based on liquid milk will increase VAT on retail pack of these products by more than 60 per cent.
"This will push up prices of these liquid milk-based products in the market to the detriment of local milk production," the Pran Group said. The company demanded exemption of 3 per cent VAT at trading stage for liquid milk from the present 1.5 per cent for all dairy products, like rice, as it is a major source of nutrition for children.
The proposed taxes will discourage dairy development particularly when this sector was trying to come up in tandem with other agricultural sectors which have made significant progress.
It will also discourage employment generation in non-urban rural areas. "More than Tk 40 billion have been kept reserved in the budget as subsidy to the agriculture sector but the dairy sector does not enjoy any similar facility," the reactions said.
"The imposition of supplementary duty (SD) at 10 per cent on fruit juice is clearly are unjustifiable as it does not fall within the purview of SD which is only justifiable on grounds of being "luxury item, non-essential & socially undesirable".
Recently the government brought these drinks under the purview of Tariff Value to keep prices within bounds & thus encourage consumption. This move of imposing SD will nullify the government decision and enhance prices.
"Entrancement of tariff on main raw material of fruit drink from Tk. 4 to Tk. 6 per kg will affect the retail price of fruit juice." "The proposed budget does not enhance or impose any additional duty on non-organic carbonated beverages which are discouraged in many countries," the statement added.