Scrapping subsidies on farm inputs will trigger food inflation – GAWU

The General Agricultural Workers Union (GAWU) has warned that scrapping government subsidies on farm inputs will trigger food inflation and worsen the plight of farmers.

The Union said the rising cost of fertilizer and mechanisation products was affecting the ability of farmers to expand cultivation and thus any policy that would further increase the cost of inputs could lead to a drastic drop in productivity in the coming years.

In an interview with the Ghana News Agency, Mr. Edward Kareweh, General Secretary, GAWU, said the agriculture sector was a vital area of the economy and should be among the first sectors to enjoy subsidies.

He said subsidies on farm inputs should only be reviewed at a time when the country had the capacity to sufficiently produce such inputs locally.
“If you remove subsidies on farm inputs then you are going to hurt the poor,” Mr Kareweh said.

Ghana’s food inflation stood at 55.0 per cent in July this year compared to 54.2 per cent recorded for June, with the month-on-month food inflation standing at 3.8 per cent.
Stakeholders in the agricultural sector have expressed worry about some austere economic conditions occasioned by the International Monetary (IMF) bail-out.

They argued that the removal of tax waiver on farm mechanisation products, fertilizers, imported seeds, agrochemicals, and veterinary medicines would cripple the sector and aggravate food prices if the decision was not reversed.

At a meeting with some stakeholders in Accra, Mr. Bryan Acheampong, the Minister of Food and Agriculture, said Cabinet was deliberating on the possibility of granting tax exemptions for importation of agricultural inputs.

Mr. Kareweh said granting tax waivers for the agricultural sector was not negotiable particularly at a time where the country did not have the capacity to produce essential farm inputs locally.

He said the withdrawal of subsidies for farmers “is genocidal” and could affect the productivity of “poor farmers” and lead to food scarcity.

“Subsidies are being withdrawn to very vital areas of our economy that support life. If Government would have to make cutting in expenditure in any area, it should not be in agriculture because it is the basis of life.

“When you bring about policies that deny people the basic source of life, food, then that is genocidal,” he added.

Mr. Kareweh appealed to the Government to reconsider the removal of waivers on essential farm inputs and ensure that policies informed by the IMF bail-out did not worsen the living conditions of the vulnerable.

He urged the Government to put measures in place to ensure that subsidised farm inputs reached targeted farmers to prevent smuggling to neighbouring countries.