Business and Finance
Uganda losing billions in poultry imports
By Felix Osike
Uganda is losing billions of shillings in imports of chicken from Brazil according to investigations.
President Yoweri Museveni last month warned against importation of poultry meat.
“I have been told, for instance, that somebody licensed the import of poultry meat. Yet I have been promoting chicken production in the country. What is the interest of such an official?” Museveni questioned.
New Vision investigations have revealed that between July 1 and December 3, 2011, one company Fresh Cuts (U) Ltd alone imported 725 tons of frozen chicken. This means that if Ugandan farmers had supplied these 1m birds they would have earned sh5.7b from the sales.
Chicken for export in Brazil is sold in 22 or 24 tons. According to the online prices, a kilogramme of poultry meat before payment of transport and taxes (FOB) costs $2.10 (sh5200) meaning that the 725 tons imported by Fresh Cuts cost $1.522m (sh2.24b). The landed cost (C&F Kampala) would be approximately $1.848m (sh4.58b).
When contacted, Uganda Revenue Authority confirmed that the main importers of frozen chicken were Fresh Cuts and Your Choice Ltd while American Embassy imports in small quantities for domestic consumption.
Other companies listed on URA documents are Sausage Master Limited and Olympus Trading Co. Ltd. “Most of the chicken is in transit to South Sudan and DRC. In fact last year about sh10b was for transit,” explained URA spokesperson Sarah Banage.
URA also said the total taxes paid last year for poultry imports was sh215m which industry experts claimed was less than what they were expected to pay.
According to URA documents Fresh Cuts (U) Ltd also imported frozen chicken from Belgium, South Africa and Denmark.
When contacted, a Fresh Cuts official who declined to be named said the company gets supplies from the local market and only imports when there is an emergency. “Most of our supply comes from within,” said the official. Efforts to get more comments from Fresh Cuts on June 29 were futile because the email provided firstname.lastname@example.org and email@example.com bounced.
URA documents seen by the New Vision show that on March 10, 2012, Fresh Cuts imported 24 tons from Brazil and declared the value as sh18m attracting tax of sh5.86m.
However, on the same day, another consignment of 24 tons imported by the same company, but declared as chicken on transit to South Sudan was valued at sh100m. The duties for this transit shipment would have been sh31m, if taxes were paid in Uganda.
Based on the entire consignment imported into the country last year it is estimated that at least sh1b could have been lost in underpayment of taxes.
There is also a further risk that the transit shipment which has no tax liabilities might have been sold in the country.
Brazil is a leader in meat and poultry exports and has some of the lowest production costs in the world making their products cheaper.
New Vision has also established that although some companies advertise that their poultry products as 100% Ugandan, the reality is that some poultry meat is imported and re-packaged in Uganda, leading to loss of revenue to farmers.
The Animal Diseases Act imposes a fine of sh2m or imprisonment of two years or both for illegal imports including loss of the product imported. Only hatching eggs and day old chicks are permitted to increase poultry production in the country.
Farmers cry out
Kironde Lule, a broiler farmer in Bombo said the poultry farmers were facing unfair competition from the importers. “What we are experiencing now with the influx of cheap imported chicken is that they are undercutting us on price and it is putting us out of business.” He said the Ugandan farmers had even lost out on the South Sudan market.
Acting Chairman of the Poultry Association of Uganda Aga Sekalala junior stated, “It is very unfortunate that this has been allowed to happen, because it is a risk to the food security of the country. To wake up in the morning and we are dependent on poultry imports would be a disaster,”
He said the imports had already caused a slowdown in the regular growth of the poultry sector. “We appeal to the government to re-affirm the policy and ensure long term development of the poultry industry. He also called for a higher tax on poultry imports saying, “If the imports continue, they may wipe out our industry.”
Ben Bothma, the General Manager, Bokomo, a poultry breeding and rearing said they too had been affected by the imports. “It is hurting our business. Right now we are not able to sell. There should be a strong regulation to protect the local industry,” he stated.
Samuel Muwanguzi, the proprietor of Biyinzika Enterprises, a Mukono based poultry breeding company stated, “We are an agricultural country. We shouldn’t allow dumping of those products.”
However, Ofwono Opondo, who is also a poultry farmer, argued that those seeking protection were exploiting other farmers through monopoly and price fixing.
“People seeking protection are large scale farmers who are also importing eggs, dressed chicken and day old chicks and brand them Ugandan. There is no local capacity to satisfy the domestic market. It is even worse with regional markets.”
He argued that as long as the importers do their poultry business legally, pay taxes and comply with health standards , they should not be blamed.
Government ban on poultry imports
In the 2005/06 financial year , the government passed a policy that stopped importation of any meat products into the country . This was to guard against the risk of the outbreak of Highly Pathogenic Avian Influenza (HPAI) that occurred in many countries in Asia, Europe and Africa since 2003. However special permits were allocated to institutions such as Diplomatic missions and agencies for unique meat products which could not be secured from Uganda.
What Agriculture Ministry officials say
Dr. Chris Rutebarika , the Assistant Commissioner Disease Control in the Agriculture ministry explained that the ban was partially lifted to allow importation from countries without the Avian Influenza outbreak . He however warned that importation of poultry products would kill the local industries involved in poultry production.
Acting Commissioner Livestock and Entomology Dr. Wesonga Wanderema said there is continuous monitoring by the Agriculture ministry and any consignment which has come into the country illegally has been destroyed. “Nobody is allowed to import any animal or poultry meat without getting a no objection written permission. If there is anything on the market, without this authorization, it is illegal,” he explained.
When pressed for details he wrote, “As this is an issue that has both policies, regulatory and economic ramifications, please formally apply for this information through firstname.lastname@example.org,” wrote Wesonga. However emails to this address bounced.
Other African countries such as Kenya, Ghana, Nigeria and South Africa have strict rules on importation of poultry products to protect the local farmers. In February, the South African government adopted anti-dumping measures which affected imports of whole chickens and boneless chicken cuts from Brazi.