KENYA – The Ministry of Agriculture and the Agriculture and Food Authority (AFA) have introduced a new levy on the import and export of food crops, set to take effect from July 1, 2024.

This development has drawn mixed reactions from various stakeholders in the agricultural sector.

The AFA announced the levy in a notice published on May 28, 2024. The new rates will be outlined in the Third Schedule of the Crops Regulations 2019. The commodities affected include cereals, legumes, pulses, roots, and tubers.

“Pursuant to the provisions of these regulations, the Authority through the Food Crops Directorate hereby notifies all food crops importers and exporters that starting July 1, 2024, the imposition of levies will commence as provided for in regulations 37 subsections (1) to (8) of the Crops (Food Crops) Regulations, 2019. The rates for the levies will be as tabulated in the Third Schedule of the Crops (Food Crops) Regulations, 2019,” the notice read in part.

The government argues that this levy is necessary to support local businesses and farmers. Officials believe that strong domestic industries are vital for economic self-sufficiency.

The new levy is seen as a step toward leveling the playing field for both small and large-scale farmers in Kenya.

Stakeholders’ Concerns

However, not everyone agrees with this move. Several stakeholders have voiced their concerns, warning that the new levy could have adverse effects on the economy. AAA Growers Limited, a prominent player in the agricultural sector, has been particularly vocal.

AAA Growers Limited argues that the new levy will increase production costs, especially for local industries that rely on imported consumables for processing their goods.

“The many levies we pay are already taking a toll on the efficiency of the businesses, reducing the profit margins significantly; another levy will not attract investors into the country. The ministry is also not clear on the rates of the proposed levy,” a spokesperson from AAA Growers Limited stated.

The company fears that this added financial burden could further strain an industry already grappling with high production costs.

They believe that the proposed levy could deter potential investors, exacerbating the economic challenges faced by the sector.

Balancing Act

The government maintains that these regulations, first gazetted on December 31, 2019, aim to promote the local agricultural industry. By imposing the levy, they hope to reduce dependency on imported goods and boost local production.

While the intention behind the levy is to strengthen local industries, the implementation details and potential economic impact remain points of contention.

The government has urged all importers and exporters to prepare for the changes and comply with the new regulations.

As the July 1 deadline approaches, the agricultural sector is bracing for the impact of this new policy.

The success of this levy will likely depend on how well the government can address the concerns raised by stakeholders and ensure that the benefits outweigh the costs.

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