A government flip flop on import taxes on agricultural products has left some sectors of Panama’s agricultural industry fuming while others jumped for joy.
Days after approving a sharp reduction in import duty on four dairy products, the government reversed its decision
The dairy industry feared job losses and business closures when the Cabinet decided to cut the 155% import tariff on evaporated milk to 50%, on milk powder to 20%, and on mozzarella cheese to 10%.
The measure galvanized the agricultural sector, and five days after the changes were enacted the government backtracked and issued a new decree on Monday October 28, which set thefor imported evaporated milk a tax of 110% and restored the tariff on milk powder, mozzarella cheese, and other fluids
Dairy farmers literally jumped for joy said La Prensa, but while that sector
But Tomato growers are not happy. Tariffs paid by tomato importers were reduced from 81% to 10% and remain cut.
Celestino Rivera, president of the Association of Industrial Tomato Growers, called on the Government to reconsider the measure, as it did with the dairy sector.
With a tariff of 10%, Panama Nestlé buys industrial tomato at $8 a quintal but next year will pay $5 said Rivera.
The production cost of one hectare of tomatoes varies between $8000 and $8,100 "If we get $5 per quintal we will be losing money" he said.
He estimated that the abandonment of tomato planting would mean job losses for 6000, laborers in the Azuero region, plus the abandonment of farming by over 130 farmers.
The government’s position is that the adjustments are intended to reduce the cost of the basic food basket.
But, when in September 2010 import duties on some horticultural products were reduced from 15% to 10, including lettuce, whole tomato, broccoli, cabbage, carrots and beets, there was no reduction in prices to the consumer says La Prensa.