Business and Finance

Uganda losing billions in poultry imports

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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 leah@freshcuts.net  and leah@freshcuts.biz 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 psmaaif@hotmail.com,” 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.

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