VAT on meat threatens pig industry viability

The introduction of the 15% value added tax (VAT) on meat is threatening the pig industry, which saw output increasing by 20,1% last year, an industry executive has warned.

BY MTHANDAZO NYONI

Pig industry board director, Andrew Shoniwa told NewsDay that 167 112 pigs were slaughtered in registered abattoirs in 2016 compared to 139 146 in 2015, an increase of 20,1%.

He said the tonnage of meat produced through registered abattoirs in 2016 was 11 861,8 compared to 9 222,6 produced in 2015, a 28,6% increase.

The percentage increase in tonnage of pork produced was higher than the percentage increase in numbers slaughtered, indicating that on average heavier pigs were slaughtered in 2016 compared to 2015, Shoniwa said.

“The pig industry is a growing industry as the statistics are showing. The growth in the industry is likely to be affected by the standard rating of 15% VAT on pork announced by the Minister of Finance (Patrick Chinamasa) in his 2017 budget statement.

“Pork was previously zero rated. The introduction of 15% VAT is likely going to lead to viability challenges, as the VAT is likely going to be pushed to the producers, who are struggling to stay afloat because of the high cost of production and low producer prices.”

The government recently imposed a 15% VAT on all meat products and cereals under Statutory Instrument 20 of 2017.

The industry last year suffered low demand and prices of pork, absence of long term loans to finance livestock enterprises, high cost of production and of the country’s inability to produce enough maize and soya beans, Shoniwa said.

The producer and wholesale prices decreased in 2016.

He also noted that shortages of maize and soya beans resulted in an increase in production costs, in addition to stock outs of these commodities.

“From a maize production point of view, 2017 is looking bright. The country will be able to harvest enough maize to meet its requirements, thanks to God to the good rains and government intervention through the command agriculture scheme,” Shoniwa said.

“The country will, however, not be in a position to produce enough soyabeans to meet its requirements. From a pig production perspective the availability of maize is a catalyst forproduction”.

He said the price of maize was likely to decrease, thus, favouring pig production.

“Given this scenario, I do not see an increase in pig production in 2017. We are likely to maintain the 2016 production figures. The target for 2017 is to maintain the 2016 production figures,” he said.