eBusiness Weekly
Golden Sibanda
Zimbabwe is resorting to smuggled onions due to shortages whenever the commodity is out of season; as it emerged Government has not issued import permits to dealers over the last two years to bridge the gap between demand and supply.Industry players also bemoaned lack of adequate Government support to the fresh produce industry through measures to restrict the entry of smuggled fresh produce. It has since emerged that the Zimbabwe Revenue Authority (Zimra) and police did not have enough capacity to restrict smuggling into Zimbabwe.
The development, industry players claimed, had resulted in the death of several firms including formally listed Interfresh Holdings, Payne Fruit, Mitchel Africa and Harare Produce Sales, among other.
Import permits not a solution
Deputy Minister of Agriculture, Lands and Rural Resettlement Davison Marapira told the Business Weekly farmers only need to import onion drying facilities to ensure adequate availability of onions during the off-season period.
According to the Fresh Produce Markers Association of Zimbabwe, onions go out of season after September and between January and March there will be a shortage of the commodity. But the deputy minister said that issuing import permits was not a solution.
“Why should the farmers resort to importing? We have got plenty of onions in the country; all the farmers need to do is to import the drying facilities,” he said.
“If we give import permits, the farmers will not think of importing dryers,” he added.
Deputy Minister Marapira said Zimbabwe had more than enough capacity to produce enough tomatoes and there was no reason the commodity should be imported. On apples, he said Zimbabwe was working on growing its production capacity.
Registered dealers lamented over the 20 percent surtax they must incur to import fresh produce when it is out of season, but they are facing stiff competition from smugglers who are able to sell the commodity at a significant discount.
In order to survive cut-throat competition posed by cheaply priced smuggled fresh produce imports, industry sources who spoke on condition of anonymity, said they have had to turn to smugglers to bridge the gap in the demand for onions.
Seasonal commodity
Onions go out of season after September and from January to February; the country has to rely on dried imported onions, which are now being smuggled.
This also happens with other fresh produce commodities that include tomatoes and apples, being smuggled into Zimbabwe whenever they are out of season due to either high duties/taxes and when they fail to obtain official import permits.
Industry players said they could compete against imports if the Government reduced the surtax on onions, tomatoes and apples from 20 to between 5-10 percent.
They said the 20 percent surtax on imported onions gave smugglers an incentive to use illegal entry points to bring in the commodity when it is in short supply.
Zimra compliance manager Robson Mukwena to the CZI workshop on border control that while the tax authorities has a presence on the country’s 16 formal points of entry, it had identified 32 illegal crossing points on the country’s border.
Duties, taxes drive smuggling
The influx of smuggled fresh produce, which is significantly cheaper than local produce and formally imported fruits and veggies, is said to be driven by high import duties or taxes and Government reluctance to issue permits to cover deficits.
Fresh Produce Marketers Association of Zimbabwe chairman Newton Jaravani said during a Confederation of Zimbabwe Industries (CZI) breakfast conference that there was policy inconsistency regarding the onions consumption and supply.
Mr Jaravani said it was difficult to compete with smuggled products on price given the fact that the smugglers do not pay duties and hence their products land on the market at a discount.
“Fruits and vegetables are seasonal commodities, when there is a gap the Government must import licences because when they do not, that offers opportunities to smugglers.
“The onions you are eating in Zimbabwe right now were smuggled. The authorities have not issued import licences (during off seasons) in the last two years. We could fight the smugglers if there was not such a big incentive to smuggle. The smuggled product gets a market because it is not there in the market. This is true of tomatoes, apples and onions,” Mr Jaravani said during the workshop in Harare.
“The industry has been hit hard, those that have remained operational have had to right sized. The whole value chain has been affected,” Mr Jaravani pointed out.
