Wednesday, July 24, 2024
BusinessAgri Corp sees profits double against the odds

Agri Corp sees profits double against the odds

Petitions government to lift taxes on fertilizer imports

The Ethiopian Agricultural Businesses Corporation (EABC) has registered one billion birr in profit before tax over the first nine months of the fiscal year despite emerging challenges in the agricultural input supply market.

The figure is double the 588 million birr profit the state-owned Corporation registered over the whole of the last financial year, and significantly higher than 91 million in profits registered the year prior to that.

EABC generated more than 7 billion birr in revenue over the first three quarters of the fiscal year, nearly 10 percent higher than the 6.5 billion birr its executives had been targeting. It is primarily involved in the import and distribution of fertilizer, agricultural machinery, and agrochemicals. The Corporation also multiplies improved seeds and distributes them to farmers, cooperatives and businesses.

The Corporation is one of the 26 state-owned enterprises placed under the wing of Ethiopian Investment Holding (EIH) since last year. EABC was re-established eight years ago, amalgamating five state-owned enterprises formerly working in agricultural businesses separately.

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Despite the improvements under the watch of EIH, the Corporation has listed wide ranges of challenges affecting its business in a nine-month performance report presented to parliament this week.

One of the major challenges is a failure on the part of regional states and clients to settle payments after taking agricultural inputs on credit. The report states the problems have pushed management to stop credit supply.

Another issue is a lack of foreign currency to import agricultural imports like fertilizer. To this end, the Corporation decided to work with private banks to supplement forex it has been accessing via the Commercial Bank of Ethiopia (CBE) through arrangements involving the central bank and Ministry of Agriculture. The Corporation is also planning to engage in the export of agricultural products to generate its own forex streams.

“Though the Corporation agreed with the Ministry of Agriculture to import 2.3 million tons of fertilizer for the 2016/17 Ethiopian agricultural fiscal year, only 84 percent was achieved because only 930 million dollars was allocated,” reads the report. “The government allocated a forex budget but CBE could not open a letter of credit on time due to forex priority issues.”

The report also states regional administrations are behind most of the unmet targets.

“Regional states are not timely in paying their credit for the agricultural supplies they take. They are also not pushing the federal government and CBE to allocate forex on time,” it reads.

The Corporation says it is unfairly paying taxes on agricultural inputs that should be exempt.

“The Corporation imports fertilizer on behalf of regional states and distributes it to regional states. Though fertilizer is tax free, the Corporation is forced to pay tax on it after it is imported. This is unfair,” reads the report.

It reveals the Corporation paid nearly 260 million birr in taxes on fertilizer imported between 2016 and 2020. EABC executives want to see the Ministry of Finance step in to relieve the Corporation of its tax obligations on fertilizer.

The report also reveals EABC has seen some of its assets in regional states destroyed or damaged as a result of violent conflict, and states the Corporation has finalized designs for a new headquarters in Addis Ababa.

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