Officials say farmers face a difficult situation as they pay VAT on feed and equipment
• “The government should look for alternative and creative sources of revenue. Punishing farmers with high taxes will reverberate throughout the economy,” Mbugua said.
• To boost agricultural production, according to experts, it will be crucial for the government to increase investment in key programs and projects that will lead to higher yields.
Poultry farmers in Kiambu have urged the government to reduce the prices of poultry equipment and feed.
The Kiambu Poultry Farmers Cooperative Society said VAT on breeding equipment and feed is making the business a loss-making enterprise.
“The 16 percent value added tax on agricultural implements has affected most farmers in the region, bearing in mind that we are the largest chicken growing area in Kenya,” said Zachary Munyambu, a company official.
“Farmers are facing a difficult time as they pay VAT on feed, machinery and equipment.”
Some farm equipment such as poultry hatcheries, hatcheries, dryers, ploughs, disc harrows, harvesters, threshers and milking machines, which were previously zero-rated, are now subject to VAT, making it difficult for farmers to make a profit.
“Machines such as manure spreaders, fertilizer spreaders, hay balers, combine harvesters, egg sorting machines, animal feed preparation machines, tractors and poultry hatcheries should be imported duty and VAT free so that farmers can improve their yields and we have become food secure,” Munyambu said.
The industry has faced a range of challenges from bad weather to the high cost of inputs such as fertilizers and diesel used to power farm machinery.
The cost of oil products and their by-products has been rising in the last month due to the Russia-Ukraine war as well as inflation.
Humphrey Mbugua, an expert on poultry farmers, said the introduction of input taxation has only exacerbated the problem of food production, denying the country an opportunity for significant growth.
“The government should look for alternative and creative sources of revenue. Punishing farmers with high taxes will reverberate throughout the economy,” Mbugua said.
The agricultural sector is estimated to have shrunk by 1.2 percent in 2021 due to adverse weather conditions.
Despite the expected poor weather outlook, general election uncertainty and global supply chain disruption due to the Russia-Ukraine war, agriculture is expected to grow by 4.6 percent in 2022.
This is attributed to government fertilizer subsidies and strengthening foreign demand.
The government has allocated Sh46.7 billion to the sector, down from Sh69.7 billion in 2021-2022. The allocation is intended to cover various ongoing projects and programs.
To boost agricultural production, according to experts, it will be crucial for the government to increase investment in key programs and projects that will lead to higher yields.
The programs are mainly the provision of subsidized fertilizers, quality and certified seeds and mechanization.