‘We are incurring Demurrage. Collection of import duties on imported agric equipment will make production cost high’ says GM, Goshen Greenland

motor cultivated tractor

The effort of the past administration to diversify and reposition the country’s economy through the removal of import duties on agricultural equipment has been reversed by the Nigerian Customs Service, and this has led to high production cost with negative consequences on small holder farmers across the country.
Import substitution has been a prevailing strategy to spur economic growth in developing countries as it was first theorized in the 18th century by Alexander Hamilton to protect developing countries from cheap imports. In the view of Mr. David Okpon, this has been ignored. Read his excerpts of the effect and challenges of the re-introduction of import duties on farmers with Seun Ayeni.

Please introduce yourself?

I am David Okpon, the Managing Director of Goshen Greenland, a representative of LovolArbos group, a Sino-Italian company. We are into agriculture consulting and machinery with major dealing in tractors. Our tractors are from 5.5 hp to 260 hp and fully built tractor from 20.4 hp to 260hp. 

We have Goldoni tractor and Rbus tractors, and they are all Italian products. While preparing for this exhibition, we had to import one of the low end tractors which are the motor propelled tractors for the small holder farmers. You know the small holders make about 70% of farmers’ population, and we thought that we should empower this segment of people in Nigeria. 

Fortunately when we brought these tractors, we found out that the main tractor, the four-wheel tractors attract zero percent duty charges, while the motor cultivators attracted 35% which was something we did not anticipate would happen .For instance we brought in the motor cultivator for N2.1million and the custom charges was 35%, which is 745,000 naira that we have not been about to pay till this moment of my chat with you. So we had to come into the exhibition without being able to show our equipment, but rather the pictures instead of the real thing. Meanwhile the tractors have been held back at the port for weeks, and demurrage incurred for not being able to pay the requested amount which we thought was  zero charges.   

So why are you interested in bringing in the motor cultivator?

The major interest is because of the small scale farmers who are about 70% producing food in Nigeria with hoes and cutlass for a long time. We are also targeting the young people who have finished school as we  want to encourage them going into farming using mechanized simple tools for commercial agriculture that can galvanize cottage industry that can process quality products for competitive market.  Bringing in technologies is the basic way and fastest way to go into agriculture as this will encourage more people to go farming. For instance, the Oyo state government is bringing in mini tractors and that’s because they recognize the importance of mini tractors in agriculture. Many other states are doing the same so we think this is how to go and in our research we kn0w that most farmers especially the small farmers need the motor cultivator more than the big tractors.

Do they do the same job?

No, they do not. This tractor has the capacity to use 50 implements and these 50 implements can do 100 different jobs, from clearing the farm to tilling, harvesting, processing, and other things in shortest time.  It’s a multifunctional kind of machine.

What is your request to the government?  

My request to government is to reverse this particular import charges, because this motor cultivator falls under agricultural machinery.

So there are no charges for four wheel tractors?

 Four wheel tractors attract zero custom charges, while the two wheel tractor attracts 35% and it is unbelievable.

So where do they classify it?

 They classify it under what they call the HS CODE, the HS Code for full scale tractor, fully built (FBU): HS CODE : 8701.9019.00 is different from what they call the pedestrian controlled tractor, which is a different HS Code 8701.1000.00. What we want is for government to harmonize this, so that when you bring in a two wheel tractor it also falls under the zero custom charges.

What is the implication of this denial?

The implication is that we have lost cost, because you can imagine if we had  the tractor on ground for the people who want to see and touch it, it would have given them a clearer picture of what they want to buy, so we have lost lots of customers due to the absence of the machine. 

The adage of a 35% duty on this machine will increase the price of the tractor, you can imagine if you bring in a tractor for N2million and you add N1million on it due to custom charges, how much are we going to eventually sell it to the farmers who are not rich to afford big tractors. 35% charges on this machine would amount to N740, 000 aside 10% VAT. Sum all these up, the whole addition cost will be going to a million naira.

 So tell me how a small holder farmer can afford such money towards productivity. Government need to do something urgently to help the farmers.  Ownership of the small tractors by farmer’s cooperative will definitely make farming easier for members. The idea is that cooperative should own one, and various farmers can keep interchanging it and productivity will increase, and that is what we are driving in Nigeria.