The Food and Allied Workers Union and the General Agricultural Workers Union have called on the government to follow through with the implementation of the reversal of the benchmark value discounts.
They say maintaining the benchmark value discounts will negatively affect jobs in their industry.
“As Trades Union Organizations, it is our fundamental obligation to promote and protect the social and economic interests and wellbeing of workers,” they argued in a statement.
“We, therefore, appeal to the Government that based on the negative impact of benchmark policy on jobs and survival of the industry, government should as a matter of urgency implement the removal of the benchmark policy.”
Though importers have made arguments for maintaining the benchmark discounts, these unions argue that “if a manufacturing company is closed down, more jobs will be lost than an importing enterprise.”
“It is important to state categorically that the reversal of the benchmark value policy will enable expansion of cultivation of oil palm to 80,000 hectares to produce additional 150,000 metric tons of crude palm oil required to meet total oil palm needs of Ghana, this per research will generate over 60,000 direct jobs and save the country over $300 million of foreign exchange which is currently used to import palm oil into the country,” they said as an example.
As things stand, the government has directed the Ghana Revenue Authority to suspend the implementation of the reversal of the benchmark value discounts indefinitely.
The reversal was supposed to take effect on January 4 but was met with some opposition from importers and traders.
The benchmark value, which is the amount taxable on imports, was reduced by 50 percent for some goods in 2019.
The import value for cars was also reduced by 30 percent.
Find below the statement from the unions
JOINT PRESS STATEMENT
FOOD AND ALLIED WORKERS UNION (FAWU) & GENERAL AGRICULTURAL WORKERS UNION (GAWU)
SUSPENSION OF THE REVERSAL OF BENCHMARK VALUE POLICY, IT’S IMPACT ON JOBS IN THE OIL PALM SECTOR.
Brother and Sisters, Friends from Media, Ladies and Gentlemen.
We wish to express our profound gratitude to you for responding to this invitation on rather short notice.
The purpose of our gathering today is to bring to the attention of Government and the general public the impact of the suspension of the reversal of the Benchmark value policy on jobs in the Oil Palm Sector.
On 13th January 2022, the Ghana Revenue Authority issued a Communique on the suspension of Government’s policy directive on removal of reduction of values of imports on some selected items. This directive came as a shock after almost 2years of stakeholder consultation on the matter which eventually resulted in the reversal of the policy as announced by the finance minister in the 2022 Budget.
Brothers and Sisters, the suspension of the removal of the benchmark value has occasioned sharp reaction by some local companies including some heavy players in the oil palm and related industry. For example, Wilmar Africa has annual production capacity of 300,000metri tons of oil palm, representing over 50% of Ghana’s 200,000Mt annual consumption has indicated to the Union to shut down operations if the benchmark value policy persists, this we must mention here, is nott different from other companies affected by the benchmark policy. It is instructive to point out that, prior to the introduction of the benchmark policy, Wilmar was producing over 70% of its capacity, now doing less than 48% due to the impact of the policy. Currently, there are 4 main oil palm plantations directly employing over 24,000 workers and these jobs stand to disappear if the benchmark value policy is not reversed, in fact this workers including their dependents will be about 120,00 Ghanaians who will loose their source of livelihood and some of them will find solace in social vices.
Ladies and Gentlemen of the media, it is important to state categorically that the reversal of the benchmark value policy will enable expansion of cultivation of oil palm to 80,000 hectares to produce additional 150,000 metric tons of crude palm oil required to meet total oil palm needs of Ghana, this per research will generate over 60,000 direct jobs and save the country over $300 million of foreign exchange which is currently used to import palm oil into the country.
Brothers and Sisters, we are informed that the Tree Crops Development Authority which the government has established is poised to drive this agenda, however, this agenda will be still born if reversal is not made to provide enough cushion to investors within the oil palm value chain. The benchmark value policy threatens operators of the oil palm value chain to imminent collapse. Ladies and Gentlemen, is that what we are looking for as a country??? Certainly no!. For example price gap between imported processed 25L and the local manufactured palm oil has increase from 20 Ghana cedis per Jerrican a year ago to 40 Ghana cedis today.
The above, increased the number and volume of oil products imported into the country by over 100% and selling at least 20 Ghana cedis cheaper than local products. This makes it impossible for local processing companies to compete.
Today, over 3000 permanent employees in the factory and 24,000 jobs in the plantation sector risk loosing their jobs if government fails to remove the reduction on the benchmark policy. To better appreciate the concerns of the Union, permit me to share with you the following analysis;
The table above indicates that, before the introduction of the benchmark policy in 2019, the total cost of locally produced 25litre of vegetable oil stood at $24.53, whereas the total cost of imported vegetable oil per 25litre stood at $25.92. under the new regime (after the introduction of benchmark value policy), the total cost of locally produced 25litres of vegetable oil is $23.89 but total cost of imported oil currently is $22.18.
These figures clearly show that the importer of finished vegetable oil makes a saving of $3.7 on each 25litre as against $0.64 of the local manufacturer which in absolute terms is almost Ghc22, a difference accounted for by the change of regime. This situation has resulted in the influx of cheap imported product into the Ghanaian market making it extremely difficult for the local manufacturers to sell.
Again, before the introduction of the benchmark value policy, the local manufacturer’s total cost of producing the 25litres was $24.53, whereas the total cost for import for 25litres cost $25.92, making the local manufacturer more competitive and cost efficient.
We all know that the interests of employers are mostly incompatible with the employees when it comes to the management of business; the focus of the employer is to at least breakeven to be able to sustain capital, hence it options will be to shut down the costly Labour intensive operations or warehouse imported products and market, and that is what we are afraid may happen very soon if nothing is done about the suspension.
Brothers and sisters, if a manufacturing company is closed down more jobs will lost than an importing enterprise.
FAWU and GAWU, associate with the position of AGI that “instead of the universal application of the policy to all imports, imports which come to compete with locally manufactured product be exempted from the policy”.
As Trades Union Organizations, it is our fundamental obligation to promote and protect the social and economic interest and wellbeing of workers. We therefor appeal to Government that based on the negative impact of benchmark policy on jobs and survival of the industry, Government should as a matter urgency implement the removal of the benchmark policy.
