Farm equipment: Sales to a halt since February 1
The year 2022 will have been a nightmare for importers of agricultural equipment. Indeed, according to the Moroccan Association (AMIMA), sales of new tractors have recorded a drastic drop. Indeed, at the end of the past year, barely 1,119 new units were sold, versus 1,950 a year earlier, down 43% compared to 2021.
A lower volume than that achieved nearly 30 years ago! Equipment importers partly explain this fall by the rainfall deficit that marked the 2021-2022 crop year. Other factors are attributed to poor sales of new agricultural tractors, including “difficulties for farmers in accessing sources of financing as well as the extension of the deadline for the release of subsidy funds”. Importers claim that the new provisions for granting subsidy agreements in connection with compulsory health insurance have further hampered the supply of agricultural equipment to farmers during the plowing campaign. According to professionals, the downward trend in agricultural mechanization should worsen in 2023 due to the entry into force of the new procedure relating to imports and sales of equipment and products for exclusively agricultural use. A procedure that will surely burden the sales process.
Indeed, “previously, for equipment intended exclusively for agricultural use, farmers automatically benefited from VAT exemption. Similarly, importers had VAT free customs clearance of farm equipment, and their distribution networks could acquire this equipment tax-free to supply farmers”, says the AMIMA association. As a reminder, Decree No. 2.22.809 grants only to farmers the possibility of acquiring farm equipment and products exempt from VAT provided that they present a certificate issued by the General Directorate of Taxes. This sesame supposes a preliminary identification with the Tax administration. Nonetheless, the other components of the ecosystem were excluded by the decree. For AMIMA, these provisions “endanger the situation of importers and of their distribution networks”. Importers, wholesalers, and retailers must pay the VAT both upon import and domestically and wait to be reimbursed. This can sometimes take a long time and “burden operators’ cash flow with a VAT credit that they cannot bear in addition to the amounts relating to the subsidies paid by assignment of debt”.
Importers say sales of farm equipment have come to a halt since the VAT decree came into force on February 01. In response to the difficulty in supplying the market with new equipment, farmers could resort to second-hand equipment as a solution.
Hassan EL ARIF
