Limestone dealers will be exempted from a 15pc value-added tax (VAT) in the federal authorities' bid to control worsening soil acidity on agricultural land.

Officials at the Ministry of Agriculture (MoA) and regional agriculture bureaus have been pursuing the application of lime as a cure for soil acidification. These official estimate that close to 6.7 million hectares of the total 22.8 million hectares of farmland is affected by soil acidity. Over half the afflicted area is designated as highly acidic.

Experts at the Ministry are pushing for the exemptions of limestone transactions from VAT. Last week, senior officials from the MoA, the central bank, the Ministry of Revenues and the Commercial Bank of Ethiopia (CBE) had endorsed the proposal. It will be sent to the Ministry of Finance for approval next week, disclosed Tefera Solomon, director of soil fertility at the MoA.

“The move is necessary," Tefera told Fortune. "Soil acidification is becoming a critical issue that requires urgent attention, especially in highlands and densely populated areas.”

Soil acidity comes from the build-up of hydrogen and aluminium ions in the soil, which pushes out essential nutrients and hampers plant growth. Agricultural limestone, or lime, is an alkaline substance that can reverse the process. On average, five quintals of lime is required to treat a hectare of acidic soil. The annual demand for limestone is estimated at 40 million quintals. Despite the estimated 900 million tonnes of limestone deposits in the country, supply is limited, with only 12 limestone producers operating with an annual production capacity of 720,000qtl.

Qela Lime Factory is one of these producers in Sidama Regional State. Incorporated in 2010, the company has been unable to utilise more than a third of its 60,000qtl in annual capacity over the past three years.

“The lime crushing plant breaks down frequently,” said Mamo Legesse, manager of the company. “Foreign currency is not easily available to import parts on short notice.”

Over the first six months of the fiscal year, the company produced 11,000qtl of lime, meeting less than a quarter of its target. Regional, zonal, and wereda agricultural bureaus are Qela's primary customers, buying the mineral and distributing it to farmers. A quintal of lime goes for 120 Br.

Mamo is doubtful that lifting VAT will make a difference in the use of lime by farmers.

“We can’t sell what we have in stock for months," he said. "Farmers are not interested in using the lime supplied to them for free."

Nonetheless, acid-related soil fertility problems remain significant constraints farmers face in the Amhara and Southern regional states.

Alebachew Abegaz, director of crop development of the Amhara Agriculture Bureau, says soil acidification is expanding dramatically in the region. Close to 1.7 million hectares of land is affected, over two-thirds of which is "critically affected."

Haile Letamo, a father of 12, farms wheat, maize and vegetables on an eight-hectare plot in Gorche Wereda of the Sidama Regional State. A quarter of his farmland is affected by high soil acidity, allowing him to harvest no more than 12qtl a hectare. This represents only a third of average agricultural productivity. He received 90qtl of lime from his wereda agricultural bureau over the four months preceding the last Mehir season, at no cost to him.

He saw productivity increase to 30qtl after applying lime on the three hectares.