Crocodile industry in crisis as export tax bites

Crocodile industry in crisis as export tax bites

Production halves as farmers prepare to close.

The Zambian Crocodile Farmers Association (ZCFA) has warned the industry faces imminent closure as the imposition of this year’s 10 per cent export duty takes effect.

Zambian crocodile skins are prized the world over for high-end footwear, handbags and garments, but now some US$1.3 million of crocodile skins are sitting in cold storage because farmers cannot raise the up-front money to pay the tax.

Two farming operations are closing, with another two planning to follow.

“The situation is dire,” said ZCFA chairman Johann Jordan. “Farmers need this revenue from sales to run their farms, and the nation needs the foreign exchange we generate from these exports, but this tax is on the verge of killing the industry.”

Since the export duty was introduced in January, crocodile farmers have paid US$350,000 on skins exported, and this has sucked out all the liquidity from the industry, he explained.

Operations are being wound down and there has been virtually no egg incubation this year, just as the industry was finding its feet again after a tightening of grading standards that prompted a change in growing methods, stocking densities, chemicals and food formulation in recent years.

In 2018, Zambia exported about 31,685 farmed crocodile skins, but projections show this will be reduced to about 22,000 skins this year, down by almost a third, and half that exported in 2015.

“There are more than 600 jobs at risk, mainly in rural areas. Bearing in mind that it takes about four years to establish a crocodile farm, the chance of any resurrection of the industry once collapsed, is unlikely,” said Mr Jordan.

Engagement between the association and the Ministry of Finance since January, have not resulted in the tax being reviewed, despite suggestions that crocodile skins were caught in wider legislation on the export of hides and skins due to an administrative error, as they were not specifically mentioned in the 2019 Budget speech or prior consultation.

Plans by the industry to add value to exports by commissioning a tannery and a manufacturing workshop to add value to small-scale crocodile skin products, for both export and local sales, and to supply the tourist industry, have now been put on hold.

The international market from crocodile skins – which are a renewable resource – is estimated to be worth more than US$100 million. Farmers cannot add the 10 per cent export duty to their sale price because it would make Zambian skins uncompetitive in the global market. Farmers cannot absorb the duty due to already low profitability in the sector.

“Crocodile farming is a foreign exchange earner and generates employment. It is an industry that should be attractive for long-term growth and not short-term fiscal gain,” added Mr Jordan.

“The time is now critical for a decision to be made by Government if this industry is to survive in Zambia, and therefore as an association, and on behalf of all our members and staff, we sincerely appeal to Government to abolish this export duty on reptile skins and save the crocodile farming industry from total collapse.”

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