Kagwe vows to fight punitive taxes choking Kenya’s flower farmers
Agriculture Cabinet Secretary Mutahi Kagwe
As freight costs double and VAT refunds go unpaid, Agriculture’s top official tells Naivasha fair that horticulture cannot grow its way out of taxation
By Grace Wanja
Agriculture Cabinet Secretary Mutahi Kagwe yesterday called for an urgent review of taxes on horticultural products, describing current levies as unfair and punitive to a sector already struggling under the weight of soaring production costs, doubled freight charges and a government debt of unpaid VAT refunds that is quietly draining investor confidence.
Kagwe made the remarks at the Naivasha Horticultural Fair, one of Kenya’s most significant annual gatherings for a sector that generates billions in foreign exchange and employs hundreds of thousands of workers across the country’s growing regions. The timing was pointed. Flower farmers arrived at the fair carrying a set of grievances that have accumulated over months — rising global fuel prices, freight costs that have more than doubled, and a government that has been slow to pay what it owes. The US-Iran conflict has added further pressure, pushing fuel prices higher and tightening an already strained logistics environment for fresh produce exports.
The CS was direct about the structural unfairness at the heart of the tax question. Horticultural producers, he argued, are being taxed as though they were industrial manufacturers — a classification that bears no relationship to how they operate or what they produce. “If you say a horticultural grower is an industry, a manufacturing concern, you charge them as such — that’s unfair because they are not an industry,” Kagwe said. “They are agricultural product producers. So we are debating all these things. We are liaising with my colleague in Trade to make sure the sector is treated fairly, and you know you cannot get growth out of taxation; you get growth out of production.”
He pledged to engage his counterparts at Treasury and the Ministry of Trade to address the levies hampering the sector’s competitiveness, framing the conversation not as a favour to business interests but as a basic requirement for an industry that Kenya cannot afford to lose.
The grievances from industry players were specific and urgent. Naivasha Horticultural Fair Chairman Richard McGonnel said some farms are owed tens of millions of shillings in outstanding VAT refunds — a liability that compounds the pressure on businesses that carry large payrolls. On the bigger farms, that means obligations to workforces of up to 14,000 staff. “All these petty taxes — there are a lot of petty taxes that shouldn’t be there,” McGonnel said. He singled out Kenya Bureau of Standards charges on growers as among the levies that the industry regards as indefensible. “Some of these farms are owed tens of millions of shillings in VAT refunds, and I think it’s wrong.”
The freight crisis drew equally sharp attention. Elgon Kenya Managing Director Bimal Kantaria urged the government to tackle the logistics problem at its root, calling on Kenya Airways to establish a dedicated fresh produce freight division that would operate separately from passenger services. “We really want Kenya Airways, which is our national carrier, to open a freight division so that they do only freight transportation of our fresh produce,” Kantaria said. He added that if a dedicated division was not feasible, the government should accelerate open skies agreements to bring more cargo capacity into the market. “Open skies is important so that we can bring in more planes,” he said.
Horticulture is one of Kenya’s most reliable foreign exchange earners, sitting alongside tea and tourism as a pillar of the country’s export economy. The sector’s distress carries consequences that extend far beyond the greenhouses and flower farms of Naivasha — into rural employment, smallholder livelihoods and the broader agricultural supply chain that feeds both domestic and international markets.
Kagwe has made his position clear, and the industry has made its frustrations plainer still. The harder question — whether Treasury will act on the VAT backlog, whether the tax classification will change and whether Kenya Airways or open skies will provide the freight relief the sector needs — remains unanswered. For the farmers watching costs rise and refunds remain unpaid, the fair has provided a platform. What they need now is a response.
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