They have to import trading equipment at high duty, restricting the potential growth of this sector
As an emerging sector, meat processing industry wants all the privileges the agriculture sector receives, such as lower corporate tax rate, more access to finance, and lower borrowing rates.
The Bangladesh Halal Meat Processing Industries Association issued a press release on Tuesday, where it highlighted several challenges the sector is currently facing.
For instance, to further develop the processed meat export sector, duty exemption is needed for specialized ingredients and packaging materials.
The current total tax incidence on these specialized materials, while imported, ranges from 89-127%.
To develop long-term sustainability, the feed cost of livestock needs to be reduced through duty exemption for livestock feed import until Bangladesh establishes self-sufficiency in the livestock feed, the release also said.
Seamless cool chain is fundamental for safe meat processing. That is why cold chain equipment used for meat processing and selling needs to be treated as capital machinery.
Currently, meat processors have to import trading equipment at high duty, restricting the potential growth of this sector.
For instance, refrigeration display units’ current tax incidence while importing is 104%.
That is why the association recommended that cool chain equipment imported by meat processors be treated as capital equipment.
Extraordinary duty exemption under the South Asian Free Trade Agreement (SAFTA) brings in cheap and unverified quality buffalo meats from India.
Indian meat and buffalos are given as low as 14% tax incidence versus the regular rate of 58%.
These imported meats are sold in different wet markets and roadside restaurants without proper declaration and disclosure after being thawed.
Frozen meat, if sold after multiple instances of thawing in unhygienic wet markets, can cause significant health issues. Being a non-traditional import item, Bangladesh does not have the proper lab facilities and monitoring capabilities to mitigate the health risk from this substandard meat.
Considering the high implication on the rural economy, this sort of duty exemption should be immediately withdrawn, the association also demanded.
They also said that since 2014, after the halting of Indian cattle border trade, Bangladesh has seen phenomenal growth in ruminant (cattle-Goat-Buffalo-Sheep) production.
This buoyant growth in the livestock sector has resulted in a meat surplus of 300,000 tons per annum.
As a predominantly Muslim country, Bangladesh has the potental to emerge as a Halal meat exporter across the world.
The halal meat market size is around $500 billion globally.
Over the last two decades, the poultry industry in Bangladesh has grown exponentially through the entrepreneurial spirit of rural poultry farmers, industrial investment in hatchery, feed, and other ancillary services by local entrepreneurs, and consistent policy support.
Processors can export the surplus meat generated in recent years to high-value markets like the US and Europe after further processing (such as converting into cold cuts, snacks, and sausages).
However, recently, Bangladesh has allowed special duty exemptions, specifically for Indian frozen meat.
This can potentially be detrimental to Bangladesh by decreasing the livestock rearing-based buoyancy in rural economies.