The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s 50 percent VAT rate slash on imported unprepared foods will place Bahamian farmers at “a serious disadvantage” and is counter to its sector policy, an agricultural entrepreneur argued yesterday.

Caron Shepherd, the Bahamas Agro Entrepreneurs Group’s president, told Tribune Business that the Davis administration’s bid to further ease the cost of living crisis for Bahamian consumers via a VAT break for the entire supply chain will make it even more challenging for local farmers and producers to compete on price with lower-cost imports.

Pointing out that Bahamian agriculture is still faced with having to import raw materials, fertilizers, animal feed and equipment at the standard, higher 10 percent VAT, she urged the Government to “immediately” cut or eliminate this levy entirely to enable local farmers to be more competitive and reduce their operating costs.

And, asserting that farmers always seem to face “an uphill fight” with the Government, Ms Shepherd said the imported food VAT cut again seemed to run counter to the Government’s official agricultural policy of boosting domestic production, reducing food imports by up to 25 percent, enhancing food security and retaining more of tourism’s earnings within the Bahamian economy.

Speaking after she wrote a March 9, 2025, letter to Prime Minister Philip Davis KC, outlining her own and the industry’s concerns, she told this newspaper: “This needs to be addressed immediately. It puts the farmers at a disadvantage, at a serious disadvantage, with the disparity between VAT on imported raw foods and on not just what farmers are producing but the stuff they have to buy, bring in and use.

“It puts them at a serious disadvantage. The Government is going to reduce the VAT on certain food items coming in from April 1, but they have yet to give the farmers any VAT relief on raw materials they bring in or fertilizer or tools they need to be able to grow crops and rear livestock.

“The farmer will be at a deficit, having to pay 10 percent VAT upfront and consumers paying 5 percent. The farmers are at a deficit. They [the Government] haven’t thought this thing through properly for the farmers. They need to be able to assist the farmers by reducing VAT on what they import to grow and produce. We’ll have local products that are more expensive than the products that come in with 5 percent VAT on them.”

Ms Shepherd said her pleas to the Government and its agriculture agencies have thus far “fallen on deaf ears”, and she has also failed to gain any movement with suggestions that Customs duties on agricultural inputs also be cut to compensate for VAT.

“It’s unbalanced and working against the broad agricultural sector,” she argued of the present policy position. “It is counter-acting what they are talking. They’re saying one thing for agriculture and then doing something else.

“One one hand they say they’re creating an industry; that industry is already in existence. Now they’re saying they are going to do this, and maintain the imports which they’re trying to diminish and deplete, and telling farmers they are stuck with 10 percent VAT.

“It’s like we fight uphill with the Government whenever it comes to agriculture. Agriculture is not as important as they’re making it out to be... The minister says they’re doing all this for agriculture, but on the other hand they’re putting the last nail in the coffin for the farmer,” Ms Shepherd told Tribune Business.

“It defeats the purpose for the farmers to expand the industry, to grow more, because it’s costing them more to bring in new product compared to imports.” Ms Shepherd, in her letter to the Prime Minister, warned that the 5 percent VAT rate for imported foods without corresponding tax relief for farmers “poses a significant threat to the viability and sustainability of the local agriculture sector”.

She added: “The Bahamian farming community has made considerable strides in contributing to national food security and promoting the ‘Buy Local’ initiative. However, the disparity in VAT treatment between agricultural imports and exports will severely undermine these efforts.

“Currently, agricultural products and seeds imported by local farmers are subjected to a 10 percent VAT rate at the border, whereas the final produce sold locally [will soon be] subject to only 5 percent VAT. This mismatch places an undue financial strain on our farmers...

“We are respectfully seeking clarity on the Government’s strategic considerations regarding the agriculture trade and how this VAT restructuring aligns with national objectives of reducing the country’s food import bill and promoting local food production,” Ms Shepherd continued. 

“The higher VAT on critical imports such as seeds, fertilizers and equipment creates a disparity that hinders our ability to compete with imported goods on pricing and quality. Moreover, this imbalance could potentially discourage further investments in agriculture, an industry that is vital to our economy and food independence.”

Apart from impacting the ability of Bahamian farmers to compete on price with rival imports, Ms Shepherd said current policy “contradicts national goals of food security and reducing our dependency on imported food”.

Calling for the reduction or elimination of border VAT on seeds, fertilizers, equipment and other agricultural inputs, so as to lower production costs for Bahamian farmers, she called for the Government to promote greater awareness of local produce and implement industry-friendly policies.

“Supporting the ‘Buy Local’ initiative through government procurement contracts, tax incentives for businesses purchasing from Bahamian farmers, and setting quotas for local produce in food stores and hospitality establishments would provide tangible benefits to the agriculture sector,” Ms Shepherd told the Prime Minister.

“Initiatives to educate consumers on the benefits of buying locally grown produce would further reinforce the ‘Buy Local’ message, boosting demand for Bahamian agricultural products.

“We believe that with thoughtful policy adjustments and collaborative dialogue, the Government can create a balanced approach that fosters a thriving agriculture sector while achieving its fiscal objectives. We would welcome the opportunity to discuss this matter further and contribute to a policy framework that benefits both Bahamian farmers and the nation as a whole.”