Kenyan Farmers Hit With New Taxes

The Agriculture and Food Authority (AFA) has introduced a new levy that will be charged on food crops whenever they are either imported or exported.   

A 0.3% levy will be levied on exported food and agricultural produce including cereals, legumes, and tubers.  In a notice published on Tuesday, May 28, 2024, AFA announced that the new levy will come into effect starting July 1, 2024.

The new tax places an additional burden on farmers and exporters, potentially leading to reduced export volumes and lower foreign exchange earnings.  

The Kenya National Chamber of Commerce and Industry (KNCCI) and the Cereal Growers Association (CGA) noted that the export levy would diminish the competitiveness of Kenyan produce in global markets.

In a press release issued on Thursday, May 30, 2024, KNCCI and CGA stated that cereal exports had been declining over the past three years, and given that there was a recovery in 2023, this taxation would reverse the progress. 

“It is essential to allow the cereal export sector to stabilize and grow without additional financial burden. Doing so will support long-term economic resilience and enhance our competitive position in the global market," the statement read in part.

According to the two lobby groups, agriculture is the cornerstone of Kenya’s economy accounting for 21.8% of Kenya’s Gross Domestic Product (GDP). 

It is also the second highest-wage employer in the private sector.  The levy contrasts the government's effort to enhance export growth which is crucial in stabilizing and strengthening the country's currency.

In the notice, AFA also announced taxation on the imports of the same food crops but with a different price. The import levy on the customs value for legumes and cereals will be 2.0% and 1.0% on roots and tubers.

This is in accordance with The Crops (Food Crops) regulations, 2019 which were gazetted on December 31, 2019, to guide the promotion, development and regulation of production, Processing, and trade of the scheduled food crops.

KNCCI and CGA have sought for clarification on the import levy application on member countries of the East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA), which could hinder the benefits of the regional trade agreements.