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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Latest hefty VAT tax hikes put big squeeze on Kenyan Farmers

by Bedah Mengo NAIROBI (Xinhua) -- After struggling with bad weather for the better part of this year, Kenyan farmers have new challenges to contend with.

The farmers are now grappling with a rise in the price of various inputs that include fertilizer and pesticides.

The cost of pesticides has risen following the imposition of 16-percent value added tax on all pest-control products by the government.

The tax came into force at the start of this month, together with what is imposed on fuel products, which also squeezes mechanized farmers.

The new tax pushes the cost of pesticides by up to 0.50 U.S. dollars, making them unaffordable at a time farmers are grappling with various pests and diseases including fall armyworms and Tuta absoluta.

By imposing the taxes, the government is seeking to raise its revenue base by at least 700 million dollars.

"It is a difficult time to be a farmer in this country.

"I myself grow tomatoes and these are crops that need constant spraying for them to do better," Boniface Kariuki, who farms in Isinya, on the outskirts of Nairobi, said Saturday.

Among the diseases and pests he fights on the crops are white flies and blight.

"You have to spray the chemicals throughout the season to make sure they are not attacked by any other pest or disease.

"I also have to spray on them calcium foliar feed," he said.

The new tax is, therefore, expected to push up his cost of production by 30 percent.

"This is bad for food security.

"This is bad for farming.

"We were expecting subsidies from the government, not new taxes," he said.

A chemical that he was buying at 2.5 dollars in the town where he farms now costs at least 2.8 dollars.

Moses Aseka, a maize farmer in Kitale, western Kenya, who harvested his maize recently and is currently drying before storing said the tax may lead to rise in post-harvest losses.

"Last year, I spent 50 dollars on chemicals I applied on my maize before storage.

"My costs would double this year because I have harvested more," he said.

The worst to be hit by the new tax would be small farmers as the effects of climate change brings new pests and diseases.

Last week, Aseka had to pay 20 dollars per day, up from 17 dollars for his maize to be shelled by a machine, thanks to rise in fuel prices.

"Maize farmers who had not harvested before the fuel tax came into force are currently paying heavily for the service.

"These taxes have pushed up our costs of production but the challenge is we may not pass them to end users," he said.

A 50-kg bag of fertilizer is currently going for 28 dollars, up from 24 dollars.

The shortage of fertiliser that has hit the East African nation has been occasioned by delays at the Mombasa port.

The shortage, amid the rise in pest-control products, has equally affected flower growers.

The growers have to contend with the new charges that will raise the price of cut flowers from Kenya making them uncompetitive in the global market.

Analysts noted that the tax on pest-control products is counterproductive and unhealthy for Kenya’s quest to be food secure.

"These taxes in the long-term are going to push many small farmers out of the trade because they raise costs yet farmers cannot pass the same to consumers," said Henry Wandera, an economics lecturer, in Nairobi.

Wandera added the taxes further make produce from Kenyan meant for export market uncompetitive.

"Local manufacturers of pesticides will also take the heat because their products will be expensive than the imported ones.

"The government should rethink this tax.

"All over the world, agriculture sector is heavily subsidized, Kenya should not do the contrary," he said.
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