The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian agricultural entrepreneur last night warned that the Government’s elimination of VAT on unprepared foods will “go against the grain” of improving national food security, import substitution and growing more produce locally unless accompanied by similar tax relief for local farmers.

Caron Shephard, president of the Bahamas Agri Entrepreneurs Co-operative, told Tribune Business that cutting the VAT rate from 5 percent to zero on all unprepared food with effect from April 1, 2026, threatens to place local farmers at a “competitive disadvantage” because the cost of rival imports will have been slashed at every stage of the supply chain once they reach these shores.

With Bahamian producers already struggling to match imported foods, she urged Prime Minister Philip Davis KC in a January 22, 2026, letter to similarly eliminate VAT on all “essential agricultural inputs” - such as seeds, animal feed, egg cartons and related packaging materials, and fertilizers and pesticides - for “registered” Bahamian farmers from the same date.

“Farmers nationwide commend your government’s decision to remove VAT from unprepared foods. We understand that this initiative is intended to provide meaningful relief to Bahamians, particularly those earning the minimum wage of $260 per week, and to ease the burden on families striving to maintain a sustainable household budget,” Ms Shephard wrote.

“We agree with the objective of making fresh fruits and vegetables more accessible, especially for families who must often choose between fresh produce and frozen or canned alternatives…. However, while the focus has rightly been placed on consumer relief, we respectfully submit that farmers - the backbone of domestic food production - have been inadvertently overlooked.

“Farmers are on the front lines, working tirelessly to bring high-quality food to market. Encouragingly, consumers continue to show enthusiasm for purchasing directly from farms, farmers’ markets and Family Island producers. We therefore humbly recommend that your government revisits the elimination of VAT for registered farmers who are leading the charge toward national food security and self-sufficiency,” Ms Shephard added.

“While the objective of VAT-free food items is commendable, the current framework places farmers at a disadvantage. Local producers are often forced to sell at higher prices than large food stores, which benefit from VAT-free imports, undermining the competitiveness of locally grown produce.

“Our goal as farmers is to deliver quality products at cost-effective prices for consumers. However, the VAT-free advantage afforded to larger retailers unintentionally discourages local production and weakens the push toward food independence.”

Animal feed for poultry, pigs, goats, sheep and other livestock was among the farming inputs that Ms Shephard recommended be made VAT-free, or zero-rated, with effect from April 1, 2026. Other items targeted for tax relief included seedlings and plants, potting soil, plant pots and related supplies.

“While this list is not exhaustive, these measures would significantly reduce production costs for farmers. The resulting savings would be passed on to consumers, contributing to lower food prices and supporting a healthier Bahamas,” Ms Shephard told the Prime Minister. “Farmers already operate under limited resources where every dollar counts.

“Any savings provided through VAT relief, grants or targeted subsidies would encourage increased production, stimulate economic activity, address market inefficiencies and support innovation. Reducing VAT on essential agricultural inputs promotes job creation, strengthens a struggling sector and advances important national development goals.

“Eliminating VAT on agricultural inputs will increase economic activity, lower costs for consumers and support the expansion of the agricultural industry- both in the current growing season and well into the future.”

Speaking to Tribune Business, Ms Shephard said that VAT’s removal from unprepared foods will give imports zero-rated treatment at every stage of the supply chain from the moment they arrive at The Bahamas’ border - including as they pass through wholesalers and on to food stores. She added that failing to provide similar relief for Bahamian farmers will make them less competitive on price and undermine national food security goals.

“It is going against the grain,” she warned, “and that is going to work against the farmers. We are already struggling to produce more food, and if we are going to be competing against imports that are VAT free we need to aligned with the same premise of being able to have VAT-free on our first costs.

“We’re only looking at registered farmers. It’s not like it’s going to be another bubble where it’s open to anyone and everyone to bring in inputs VAT-free. We are only asking for it for registered farmers who are registered with the Government. We are not asking the Government to go outside that.”

Ms Shephard added that, if the Government was to implement her VAT-free recommendations, they will be a “cost saving” for all Bahamian farmers - especially on fertilizer and pesticides that are “rather expensive”. She said: “That will enable us to come in at a better cost price than we are now and really compete with the wider market.

“We are producing better quality; it is fresher and lasts longer, and the taste is there which it is not with imports that have been on board a ship in a container. We are able to produce quality crops first-hand for the consumer on a reliable basis. We need to come in at a better price. We’re at a disadvantage with adding VAT on to the first cost.

“We can produce more if we get it in at a better price, and we’re able to increase our production of more fresh vegetable and fruits that people are consistently asking for,” Ms Shephard added. “We are ready to supply it. Having the elimination of VAT will bring us more in line with the prices that food stores are importing at. This will also fall into line with the sustainable development goals of producing more of our own food.”

Ms Shephard, in her letter to the Prime Minister, wrote: “It is therefore our humble and urgent recommendation that this proposal be considered for its effectiveness, measurable outcomes and positive long-term impact on the agricultural sector.

“The farmers of The Bahamas stand ready, willing and able to produce efficiently, responsibly and at scale - delivering the highest quality products our nation deserves….. As farmers, we enter this new year leaving behind the struggles, disappointments and hardships of 2025, while looking ahead with hope, determination and a clear vision for a stronger and more sustainable agricultural sector in The Bahamas.

“Across the country, farmers have once again invested millions of seeds into the soil and are now transplanting seedlings to ensure the continued production of fresh fruits and vegetables for Bahamians and visitors alike, contributing to the rich flavours that define our national cuisine.”