Industry against new tax

An oil palm bunch and loose fruits along Kapiriuka road outside Alotau, Milne Bay. – Nationalpics by PETER ESILA

THE oil palm industry disagrees with the Government’s instruction to impose a large tax on fertiliser, agriculture’s most fundamental input, as it will kill the industry.
Chairman of PNG Palm Oil producers association and New Britain Palm Oil Ltd (NBPOL) PNG country manager Robert Nilkare said the oil palm industry was heavily reliant on fertiliser to maintain soil fertility.
“Without it, production will decline and soil fertility will degrade,” he said.
Nilkare said the agriculture which supported a large number of smallholders and was one of the country’s biggest would suffer greatly from this.
“This is particularly the case for PNG’s smallholder farmers whose palms are almost universally deficient in nutrients.”
The Department of Finance issued a financial instruction, 01/21, to all regulatory agencies, including Department of Environment and Climate Change.
This was to implement the new fees and charges as approved by Government, gazette notice G673.
Among many other fee increases imposed on businesses and communities such as fuel, the PNG Government is now charging a fee on all fertiliser imports, especially fertilisers that contain nitrogen.
“Decades of research has gone into this to find ways to increase fertiliser uptake by smallholders,” Nilkare said.
“This new tax on fertiliser will immediately increase the cost of fertiliser to smallholders, this will reduce their usage and so reduce their production, income and livelihoods.
“This is particularly the case in areas where increasing rural population is creating significant land pressure and so finding ways to improve production from existing farms is paramount.”
Nilkare said the consultants that presented the recommendation and justification to Government for the tax on nitrogen synthetic fertiliser did not prepare well and had therefore given poor advice to the climate change and development authority (CCDA).
“The justification is seriously flawed technically, clearly no agricultural expertise was involved, and there was no prior consultation with the agriculture sector,” he said.
“In fact, the CCDA’s own awareness presentations stated that consultation over the synthetic fertiliser levy was with the chamber of mining and petroleum!”
He said the main justification given for the tax on agricultural fertiliser was green house gas (GHG) emissions reduction, however, the CCDA’s own studies had shown that the greatest driver of GHG emissions was deforestation and forest degradation.
Nilkare said that only 30 per cent of the projected tax revenue collected would go to climate change support which meant the new tax was about feeding consolidated revenue.
He said it was estimated that the oil palm industry would likely have to pay the Government K10 million per annum from the new fertiliser tax with K4 million of that amount paid by smallholders as their share of the fertiliser tax.
“This issue could have been better managed if there had been some consultation with the agriculture sector stakeholders before a tax on agriculture was introduced,” he said.
Nilkare said the Government’s claim that agriculture was the “backbone” of the country was being undermined with the imposition of such taxes.


  • This is very bad instead of government to subsidize fertilizer to promote good production and improve better oil palm development , I think government should look for export tax and not import tax,,, this is where we are killing down the industry ,the milling company is now ready to charge the small growers with the high cost of fertilizers and this will become an issue for low productions.

  • Again the Rural Agriculture Sector is targeted with a Tax on Fertilizers as we know it will affect the Oil Palm, Rubber and other sectors across PNG. The question needs to be asked why are the people who live and work in the Agriculture sector be penalized again and again. The report supplied by Robert Nilkare says that not all taxes collected will go towards Climate Change. This means the small holder in the Oil Palm Industry will pay 2.8 million Kina into the Consolidated fund out of 4 million Kina paid in. If the Government had said that a large portion of the Taxes collected will go into much needed Infrastructure such as maintenance of roads and
    bridges in PNG the response from the Rural Community could be different. I ask the Government to sit down with the Small holders and the leaders in the Industries affected and come up with a solution that will help all Rural Industries not hinder progress

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