From MARC NKWAME in Arusha, 27th May 2010 @ 22:00, T
Daily News
EDIBLE oil processing industry in Tanzania is collapsing. Four large factories have so far closed down and the remaining ones are struggling to make ends meet.
The growing number of oil factories closing down has sent home close to 3000 workers and the remaining few are struggling to sustain their employment base, this was learned in Arusha yesterday.
A statement issued after a stakeholders' meeting here indicated that some of the closed factories include the NSK Oil of Arusha, Moproco Limited of Morogoro, and Afro-Multipurpose and Palsons, adding that the Mount Millers, running two factories in Arusha, is the only remaining local producer still operating in the northern zone.
Local investors in the industry claim that this trend has been caused by the tax waiver on imported oils when the local producers were heavily taxed.
"The problem here is the issue of Value Added Tax which makes locally produced oil more expensive than imported products whose edible oils are now squeezing out local products from retailers' shelves.
Meetings of local industry dealers and investors here have revealed that cheap edible oil imports, most bearing fancy names, advanced packaging material and subsidies from governments of their countries of origin, have forced many local factories to close down.
"High rates of taxation are making locally produced edible oils to be more expensive than imported ones coming from countries that subsidise their industries," said Mr Nelson Mwakabuta, the manager of Mount Meru Millers.
Most of the imported oils are reportedly being shipped from Indonesia and Malaysia but their health safety in regard to the cholesterol contents cannot be ascertained, according to local producers here. It was revealed at the meeting of edible oil producers here that Tanzania consumes some 330,000 tons of edible oil per year but 55 per cent of that is imported while only 45 per cent is produced locally.
"The local edible oil sector, including its informal division generates 55 bn/- for the economy and engages over 3 million rural residents, primarily farmers," the participants observed.
Apparently some 500,000 families rely on oil seed farming sector. The edible oil industry in Tanzania is mainly based on sunflower even though cotton, simsim, groundnuts and soya contribute to some extent.
Imported products on the other hand are from variety of crops and mixed formulas. Singida is the main producer of sunflower in the country and has dedicated much of its area for its production. The Regional Commissioner, Mr Parseko Ole Kone, said that the crop is the lifeline in area.
"Here every family farms between 10 and 20 acres of sunflower which is the leading cash crop, followed by cotton and onions. In total, over 200,000 acres are under cash crop but 150,000 acres are dedicated to sunflower alone," he said over the phone.
The RC has appealed to the central government to consider wavering VAT from local oil processors and charging taxes to imported edible oil in order to give the local industry a chance to compete in the sector and rescue millions from losing their income.