Government, Sector Players Chart Reforms as Agriculture Stakeholders Raise Alarm Over Taxes, Trade Barriers

The Ministry of Agriculture and Livestock Development on Wednesday convened a high-level stakeholder forum to discuss persistent challenges facing Kenya’s agricultural value chains, as farmers, manufacturers, and exporters called for urgent reforms to safeguard the sector’s competitiveness.

The meeting, chaired by Agriculture Cabinet Secretary Sen. Mutahi Kagwe, brought together the National Treasury, Council of Governors (COG), the Kenya Revenue Authority, regulators, and private-sector associations representing multiple value chains. During the session, stakeholders presented a comprehensive memorandum outlining tax, regulatory, and trade issues affecting production, processing, and export growth.

The memorandum was officially received by National Treasury Principal Secretary Dr. Chris Kiptoo and COG Chairman and Wajir Governor H.E. Ahmed Abdullahi.

Predictable Tax Regime, Faster VAT Refunds

A major concern raised was the unstable VAT regime on agricultural products and inputs. Stakeholders urged the government to harmonize VAT and consider zero-rating or exempting key inputs for at least 10 years to support long-term business planning.

As of when the meeting took place, more than Ksh.150 billion in VAT was owed by the government in refunds, with stakeholders warning delays would further disrupt cash flows, a matter which would culminate into scaling down or closure of several companies.

As a remedy, the sector is pushing for a one-off bond issuance to clear the backlog.

In response, PS Kiptoo said the Treasury would incorporate the issues into the national budget-making process.

“We are considering a one-off payment of VAT refunds alongside pending bills to ensure industries do not close down,” he said. He also announced plans for a joint meeting with all regulators to review levies affecting the sector.

eTIMS Rollout Raise Concerns

Associations in the agro-processing and export sectors raised alarm over escalating duties on packaging materials such as Kraft paper. Some firms currently face duty rates of up to 60%, making Kenyan exported products less competitive.

Stakeholders also appealed for an extended grace period on eTIMS compliance, saying many farmers cannot meet documentation requirements. They warned that rushed enforcement could push farmers back into informal markets, weakening structured value chains.

The introduction of a 2% land rate on farmland drew criticism, with stakeholders arguing it would impose heavy burdens on smallholder farmers in tea, coffee, rice, and cane-growing regions.

According to COG Chair Governor Abdullahi, the original intent was to levy on multinational tea estates rather than small-scale farmers. He agreed to refer the matter to the COG Agriculture Committee.

He also acknowledged complaints about cross-county cess charges, saying they are illegal and must be addressed. “Cess should only be collected in the county of origin,” he said.

Call for Stronger Trade Agreements

A pain point among Kenyan traders has been punitive tariffs, and participants said they have disadvantaged Kenyan exports against regional competitors. India was cited as an example, where Kenyan products face a 30% tariff while exports from Uganda and Tanzania enjoy zero duty.

Stakeholders urged the government to negotiate new bilateral agreements to protect Kenya’s market access.

Among the issues was also duplication of levies across regulatory agencies and requested an overhaul of the proposed 0.2% standards levy, arguing that KEBS already charges for standard marks.

They also called for increased regulatory surveillance to curb illegal trade in restricted raw commodities, and for strengthened extension services, seed certification, and pest control support.

CS Kagwe Calls for Innovation and Technology Adoption

In his remarks, CS Kagwe said the ministry would escalate key sector concerns, including VAT refunds and pending bills, to the Cabinet.

He urged both public and private-sector stakeholders to embrace innovation to increase productivity.

“Land is finite. Through the adoption of technology, including AI, we can increase production per acre and make agriculture more sustainable,” he said.

Kagwe also challenged exporters to uphold ethical standards, warning that malpractice harms the country’s reputation in global markets.

Broad Representation

The memorandum was jointly developed by major private-sector associations including the Agricultural Sector Network, Fertilizer Association of Kenya, KENADA, Cereal Growers Association, Cereal Millers Association, Kenya Flower Council, FPEAK, KTDA, KTGA, Macadamia and Avocado associations, Kenya Dairy Producers Association, AKEFEMA, KEPOFA, LASK, KVA, and others.