Saturday, April 20, 2024
BusinessFlour mills enthusiastic about new duties on franco valuta imports

Flour mills enthusiastic about new duties on franco valuta imports

Wheat flour importers pay 25 percent

Domestic wheat millers breathe a sigh of relief as the authorities enact a 25 percent duty on imported flour, the proliferation of which has been pushing domestic suppliers out of the market.

A circular signed by Eyob Tekalign (PhD), a state minister of Finance, last month instructs customs officials to levy a 25 percent duty on wheat flour and 15 percent on other grain flours as the government looks to clamp down on the mass import of the essential commodity via the franco valuta scheme.

Local mills have long been complaining about the flood of cheap flour imported duty free, shutting them out of the market. Eyob’s letter says he wants to “make domestic producers competent and help import substitution efforts.”

Tesfaye Haile is the general manager of the Ethiopian Millers’ Association, an industry lobby group with 200 members, several of whom are engaged in the wheat flour business. He sees the circular as a saving grace for domestic flour mills, which have been teetering on the edge of disaster for several months now. This includes 250 wheat mills that do not hold Association membership.

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“The import of cheap, lower quality flour was heavily affecting our business,” said Tesfaye.

He told The Reporter repeated appeals to the authorities for a solution were rejected on the basis that franco valuta imports were necessary for market stabilization. At the end of last year, imports were paused following appeals to the ministries of Industry, Finance, and Trade.

“With the new 25 percent tariff, local millers will now be competent. Their price variation was 800 to a thousand birr per kilogram previously,” Tesfaye said. “The tariff will make the prices equal and consumers will make use of local flour for its better quality.” 

Reports of fraudulent packaging of wheat flour, where importers would sell imported products disguised in the packaging of local manufacturers, are among the factors that have compelled the government to impose the new taxes.

The prices of byproducts from mills were also soaring, making costs unbearable for animal feed processors. They saw prices for wheat flour byproducts double to 3,000 birr a quintal over the last few months as production at mills slowed.

“Prices are going down to 2,000 birr a quintal,” said Tesfaye.

Industry sources told The Reporter that the new import duties and subsequent rise in market costs for wheat flour are causing a stir among businesses engaged in the production of pasta, bread, biscuits, and other wheat products, who face higher prices for their primary input.

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