Wednesday, November 13, 2019

Puerto Rico agricultural incentives laws to be amended

By on June 14, 2018

Editor’s note: This report first appeared in the June 7-13 issue of Caribbean Business

The secretary of the Puerto Rico Agriculture Department, Carlos Flores Ortega, said Gov. Ricardo Rosselló Nevares submitted legislation last week to the Legislature to create the Puerto Rico Incentives Code. Senate Bill 1013 will not do away with any agricultural incentives law, but will make parameters stricter for recipients of this aid.

The secretary explained to Caribbean Business that the effort would adjust and consolidate the incentives and subsidies Agriculture grants local farmers, which in many cases have not produced the desired results. That is why, he said, there needs to be a thorough revision of these incentives.

“It is not that [the incentives] are eliminated, in the context that the attributes of these laws are removed. What is being done is that these laws are being summarized. When the bill says this or that is being eliminated, what is being done is that they are inserted into the new incentives code, and the attributes and benefits these laws offer go into the new incentives code. It is not that they are eliminated,” Flores Ortega said.

“Farmers know there needs to be a revision of these subsidies to see what [the incentive’s] purpose is. What we are really looking for are incentives. What the subsidy is really addressing is a fault, maybe, in the development and filling up of a space that possibly does not lead to growth. We are looking to incentivize production, success; the creation of jobs, that is what we are looking for, so there’s really the greatest return on the investment. Many farmers know that, which is what they are asking for. We are not doing anything other than listening to what the farmers themselves say,” he added.

Flores Ortega provided, as an example, Law 225, which stipulates that “bona fide” farmers are traditionally the ones who earn 50 percent or more of their income through agricultural activity. With these amendments, according to the secretary, this percentage would increase to 80 percent.

“Now, it will be stricter because it will give the bona fide certificate to those whose 80 percent or more of income is earned through an agricultural activity, and it seems to me that this is fair because we are separating laws that are specific to agricultural activity. It’s not that it’s 50 percent sometimes and in others 51 percent or 49 percent. We had problems differentiating what a bona fide farmer is,” he said.

The chair of the House Agriculture, Natural Resources & Environmental Affairs Committee, Rep. Joel Franqui Atiles, said public hearings on the bill have yet to take place, but even though he did not specifically state if it’s an elimination or an amendment, he left the door open for possible changes in the way these agricultural incentives are awarded.

“The public hearings on this new incentives code have yet to be worked on; what can happen is that the way these incentives are awarded changes. We want to aim it more toward production, not to award incentives just for the sake of it. [The] Agriculture [department] keeps subsidizing and subsidizing, and we do not see that production increase or improve, which is what we want, that agriculture grows in Puerto Rico. Yes, the incentives will continue, but the way they are awarded is what could change,” he said.

To questions from Caribbean Business on whether the recently announced alliance with the Dominican Ministry of Agriculture, to set up an exchange of resources, is part of this new readjustment of the agricultural incentives laws, the legislators said that it is not the case, that it is about improving conditions for agricultural production in Puerto Rico.

However, although both government representatives categorically stated that this is not a derogation, but an amendment, the truth is that the language used in SB 1013’s explanatory memorandum is clear and does not indicate they would “amend” these laws, but categorically indicates its proposed repeal. Nonetheless, the legislative bill is specific about which laws would be amended and which would be repealed.

“To adopt the Puerto Rico Incentives Code, consolidate the dozens of decrees, incentives, subsidies, monetary stimulus, reimbursements or existing tax or financial benefits…repeal Act 42 of June 19 of 1971, as amended, known as the Law of Agricultural Workers’ Annual Bonus…repeal Act 46 of Aug. 5 of 1989, as amended, known as the Law to Establish the Program of Income Subsidy to Eligible Farmers…repeal Act 225-1995, as amended, known as the Law of Agricultural Tax Incentives of Puerto Rico…repeal Act 26-2008, as amended, known as the Law of the Program for Financing Research & Development of Agricultural & Food Technology, reads the legislative bill submitted for consideration during the ordinary session of the eighteenth Legislative Assembly.

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