Actualidad Panama

Regulating the agricultural sector

Acts 16, 17, 18, 19, 20/2018

On 23 February 2018, the President of the Republic of Panama passed five (5) regulations to boost the agricultural sector and assure nationwide food security.

  • New stockbreeding development fund. Act 16/2018 creates this fund, which will receive its income from the product of the country’s stockbreeding activity. These revenues will be liable to a duty of USD2.00 for each animal slaughtered in any of the country’s slaughterhouses, public or private. The money generated in this fund will be used for research and to improve stock production, to promote the consumption of beef, training and enterprise-building and support for the stockbreeding sector, as well as for administering collection of the tax in the slaughterhouses.
  • Rice as a food security crop. Rice has been declared a nationwide food security crop by virtue of Act 17/2018, because it is the staple in Panama’s basic food basket. The state will adopt a number of measures to support production of this product:
    • Mechanisms will be implemented in the short term to waiver import taxes on priority inputs in the cultivation of this product.
    • There will be an agricultural subsidy of USD7.50 per 100 kg of unwashed, wet paddy rice, an amount that will be reviewed every three (3) years. In the case of dry rice, its equivalent weight in unwashed and wet rice will be taken.  
    • Exemption of 40% of the cost per liter of diesel and 40% of the cost of lubricants that are used in the growing of rice.
    • In the case of contingency rice imports due to shortage, the Executive Branch will provide a subsidy of USD0.50 for every 100 kg of imported rice.
    • Within a month of its passing, the Executive Branch will draft the secondary legislation on this law.
  • Regulation on the special transport of fuel for agricultural machinery. Act 18/2018 creates the regulatory framework for special transport of fuel for farm equipment and machinery, and the conditions that motor vehicles or trailers used for this purpose must meet. Some of the most important points of the regulation are as follows:
    • Farm machinery: understood as machinery or equipment used by farmers for work, such as: tractors, crop harvesters, soil harrows, cutters, mowers, hay tedders, fodder wagons, mixers, balers.
    • Criteria for moving this machinery and schedules
    • The upper limits for transporting hydrocarbons for agricultural purposes are laid out.
    • Requirements that vehicles transporting hydrocarbons for agricultural purposes must meet: license to drive type C vehicles or larger, vehicle insurance cover up to USD25,000 to include civil liability and environmental damage cover, permit and sticker issued by the Firefighters’ authority.
    • The special transport permit will have an annual cost of USD50.00.
    • The supervisory bodies enforcing this regulation will be Panama’s Insurance & Reassurance Authority and the Republic of Panama’s Firefighting Authority.
  • New special agricultural zone: Palmar municipality. Act 19/2018 defines “rural areas: special farming zones”. The purpose of the regulation is to encourage agricultural activity in the El Palmar (Ocú) region, classified as an area suffering generalized poverty, together with the development of productive activity in other zones classified as special agricultural areas. Agricultural areas must meet three of the following definitions:
    • Location in remote areas and ones suffering from extreme poverty.
    • Situated in areas that are difficult to access.
    • A population of more than three thousand (3,000) inhabitants.
    • Lacking even minimal transport and communication facilities.

We should point out that zones classified nationally as special agricultural zones will take priority when allocating budgets for basic community services, highways and support in selling agricultural products.  

  • Support for agricultural producers affected by adverse climate conditions: Act 20/2018, amends Act 24/2001:
    • Loan amortization: loans granted after this amendment becomes law will be amortized over a twenty-five (25) year period at an annual interest rate of up to 2% on the balance as an actual rate (previously, loans had a term of seven (7) years, with annual interest of up 5% on the balance as an actual rate).
    • Elimination of outstanding interest: by virtue of the new regulation small and medium size producers who have debts outstanding in the period between June 2001 and 31 December 2014 (awarded pursuant to this law) will have their outstanding interest payments condoned as soon as this law comes into force, and the references on their credit history will be expunged.
    • Functions of the Committee: the regulatory committee will take on additional functions. It is to have powers to approve loans, arrange payments of delinquent credits and transfers of written off loans to delinquent portfolios, as well as to issue internal regulations, among others.
    • Unused assets: finally, there is a decision on the budgetary resources that are left unexecuted for 8 months in the Special Contingency Credit Fund. They should be transferred to the Banco de Desarrollo Agropecuario (BDA) [Agricultural Development Bank], to be used as loans to micro, small and medium agricultural producers.