The directive that exempts imported agricultural machinery and inputs from duties reached the final level.

Drafted by the Ministry of Agriculture, the directive has been in the making for the last eight months to waive taxes and duties on selected agricultural machinery, irrigation technologies and animal feed processing machinery, as well as agricultural inputs.

The 96-page draft directive is now tabled to the senior officals  of the Ministry and waiting for final approval. It will waive duties on a total of 591 types of agricultural machinery, accessories and agricultural inputs including tractors, combiners, generators, pumps, fertiliser and seeds.

The Ministry started the drafting process after the Agricultural Transformation Council proposed the duty exemption on selected agricultural machinery and technologies in December 2017. The Council called for the exemption hoping to enhance agricultural productivity and ensure food security through agricultural mechanisation.

Agriculture contributes to close to 46pc of GDP and employs over 80pc of the population.

The Ministry of Agriculture identified and listed the machinery and inputs sent to them from the Ministry of Finance, for approval. The Ministry sent the letter to the Customs Commission last May to be effective as of the same month.

However, the directive could not be enacted, since the implementation requires a legal framework and tractors were excluded from the list, according to Tamiru Habte, director of mechanisation at the Ministry of Agriculture.

Mulay Weldu, tax policy director at the Ministry of Finance, says that tractors were excluded from the original list with the main aim of not discouraging domestic tractor assemblers.

"But we included tractors in the list after learning that the local production doesn't satisfy the demand," Mulay said.

After getting the green light from the Ministry of Finance to include tractors in the list, the Ministry of Agriculture drafted the directive and sent it back to the Finance Ministry two months ago for comment.

The draft directive limits the number and types of machinery that will be imported tax-free by private agricultural training centres, youth and women's organisations, non-governmental organizations (NGOs), rental service providers, universities, technical and vocational education & training schools (TVETs) and garages that are engaged in maintaining agricultural machinery.

However, it posed no limit on agricultural machinery importers, manufacturers, assemblers, agricultural institutes, government enterprises, public enterprises, cooperative unions, associations and federations.