Kenyan farmers demand USD 92M overdue VAT refund

KENYA – Kenyan horticulture farmers are urging the government to expedite the payment of over KES 12 billion (USD 92 million) in VAT refunds, a delay that has significantly disrupted their operations.

The call for immediate action comes through the Agricultural Employers Association (AEA), which represents the interests of these farmers.

The AEA’s chief executive officer, Wesley Siele, highlighted the financial difficulties faced by farmers due to the delayed refunds.

He stated, “The government owes farmers over KES 12 billion in VAT refunds, and this can be used to expand the sector and create more job opportunities.” The last payment to farmers was made in 2020, during the peak of the Covid-19 pandemic.

In addition to the delay in refunds, farmers are contending with rising taxes and the aftermath of recent heavy rains, which have caused extensive crop damage. The financial strain has forced some farmers to reduce production, exacerbating concerns over food security.

Siele emphasized the need for government intervention to support farmers who have suffered losses due to the adverse weather conditions.

“We are calling for a voice of reason in the plans to increase the minimum wage bill as currently many farmers are facing harsh economic times,” he said. The association is advocating for the creation of a fund to assist farmers affected by the rains, who have already invested heavily in fertilizers, seeds, and labor.

The association’s chairman, Kirimi Mpungu, criticized sections of the Finance Bill that propose new taxes on farmers.

He pointed out that the agricultural sector is a key economic driver for the country, yet areas like livestock farming receive minimal attention despite their high potential.

Outgoing chairman Stephen Strong also voiced his concerns about the increasing costs of production and new taxes targeting small-scale farmers.

“Currently, the biggest challenge facing the agricultural sector is the high cost of production and new taxes targeting small scale farmers, and this could kill farming,” he said.

Justice Fred Ochieng, the key speaker at the AEA’s 61st Annual General Meeting in Naivasha, recommended the use of Alternative Dispute Resolution (ADR) to settle conflicts between employers and workers in the agriculture sector.

“We have come to learn that this mechanism is very effective in resolving disputes mainly in the agriculture sector where we have disputes around wages and working conditions,” he stated.

Kenya’s fresh produce industry is a major contributor to the national economy. As of 2024, the industry remains vital, with the country exporting 245,194 tons of vegetables, 224,643 tons of fruits, and 110,811 tons of cut flowers to 147 destinations worldwide.

The industry provides direct employment to approximately 350,000 people and indirectly supports over six million livelihoods. Small-scale farmers are especially crucial, contributing over 90% of the produce consumed within Kenya.

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