By MKT Reporter
A major consultative forum convened yesterday saw agricultural value chain players present a memorandum to the National Treasury and the Council of Governors, outlining tax, regulatory and market challenges they say are weakening the sector’s competitiveness.
The meeting, hosted by Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe and held at Pride Inn Hotel, Nairobi brought together senior government officials from the National Treasury, the Kenya Revenue Authority, county governments, and dozens of regulators.
Farmers, manufacturers and private-sector associations used the session to lay out long-standing concerns that cut across production, processing, export markets and regulation.
After hours of deliberations, the stakeholders formally handed their memorandum to National Treasury Principal Secretary Dr. Chris Kiptoo and Council of Governors Chair and Wajir Governor Ahmed Abdullahi. Their biggest request was for a stable and predictable tax regime, beginning with harmonised VAT rules for agricultural produce and inputs.
They argued that constant shifts between zero-rating and exemption have disrupted long-term planning and worsened backlog of VAT refund claims, refunds that, according to the stakeholders, have now exceeded KSh150 billion. They warned that delayed refunds are draining working capital, forcing businesses to scale back or close, and urged the government to clear the outstanding amount through a one-off bond issuance.
Packaging costs were another flashpoint. Stakeholders said excise duty on packaging materials, particularly Kraft paper has pushed the total duty to as high as 60 percent in some cases, raising domestic prices and making Kenyan exports less competitive.
They asked for a special exemption for agricultural packaging to cushion firms that depend on export markets.
Concerns over compliance with KRA’s electronic invoicing system, E-TIMS, also loomed large. Many farmers, especially smallholders, have yet to gather the documents needed to comply. Stakeholders fear that rushing the rollout will push farmers into informal markets where brokers exploit them and weaken the structured value chains that currently connect them to factories and exporters. They asked KRA to extend the grace period.
Exporters raised the alarm over tariffs that disadvantage Kenyan products in global markets. They cited India, where certain Kenyan agricultural exports attract a 30 percent tariff while the same goods from Uganda and Tanzania enter duty-free.
They called on the government to negotiate bilateral deals that open new markets and level the playing field.
County-level issues featured prominently too. Stakeholders opposed the proposed 2 percent land rate on farmland, saying it would heavily penalise tea, coffee, sugarcane and rice farmers.
They also condemned the growing trend of counties imposing illegal cross-county cess charges, which they said inflate transport costs and disrupt supply chains.
A review of regulatory levies was also sought, with stakeholders arguing that some agencies duplicate charges and that the proposed 0.2 percent standards levy by KEBS is unnecessary since KEBS already levies fees for standard marks.
Stakeholders further urged regulators to boost surveillance to curb the export of restricted raw commodities, the poaching and hawking of raw materials, and other activities that weaken formal value chains.
They also asked for stronger extension services, seed certification and pest and disease management to protect productivity.
Responding to the memorandum, Treasury PS Dr. Kiptoo assured stakeholders that their concerns would be factored into the budget-making process, noting the government’s commitment to predictable taxation under the National Tax Policy and the Medium Term Revenue Strategy.
He revealed that a one-off payment to clear VAT refunds and pending bills was under consideration to prevent further industry closures.
Kiptoo added that while regulators are being pushed toward financial self-sufficiency, the focus must remain on whether levies align with the value of services provided.
He committed to convening a joint meeting of all regulators to review the charges they impose.
The CoG Chair acknowledged the revenue pressures counties face but affirmed that cross-county cess is illegal and should be addressed by the COG Agriculture Committee led by Bungoma Governor Kenneth Lusaka who was present at the forum.
He explained that initial proposals on land rates were aimed at multinational tea estates controlling vast tracts of land, but agreed that the matter now requires revisiting given its impact on smallholder farmers.
On his part, Kagwe who moderated the sessions pledged to escalate unresolved issues, including VAT refunds and unpaid bills to the Cabinet. He urged both public and private sector players to embrace technology to increase productivity, warning that Kenya cannot rely on expanding farmland as land is finite.
AI and other modern tools, he said, offer a path to higher yields and a more sustainable agricultural future. The CS also cautioned exporters against unethical practices that could damage Kenya’s image and competitiveness, calling on the sector to uphold high standards and strengthen self-regulation.
The memorandum was presented by a wide coalition of private-sector associations representing virtually every agricultural value chain.
These included ASNET, FA-K, KENADA, CGA and CMA, KFC and FPEAK, New KPCU, KTGA and KTDA, MacNut, the Avocado Society of Kenya, KDPA, AKEFEMA, KEPOFA, LASK, VASIK, KVA and the Veterinary Paraprofessionals Association of Kenya.
Scores of agencies under the Agriculture and Livestock Development Ministry also took part in the forum, which marked one of the most comprehensive attempts this year to jointly address the pressures facing Kenya’s agricultural economy.
Also present were Principal Secretaries Paul Rono (Agriculture) and Jonathan Mueke (Livestock Development).