Agriculture Stakeholders Press Treasury and Governors for Major Tax and Policy Reforms to Boost Sector Competitiveness

By Ryan Mumo 

Kenya’s agricultural sector has sounded the alarm over mounting taxes, unpredictable levies, and trade barriers that continue to weaken the country’s competitiveness, urging the government to move swiftly to implement value chain–driven reforms.

This comes after a high-level stakeholder forum convened on Tuesday in Nairobi by Agriculture and Livestock Development Cabinet Secretary Sen. Mutahi Kagwe, bringing together private sector players, farmers’ associations, regulators, the Kenya Revenue Authority, the National Treasury, and the Council of Governors.

During the meeting, stakeholders presented a detailed memorandum to National Treasury Principal Secretary Dr. Chris Kiptoo and Council of Governors Chairperson, Wajir Governor Ahmed Abdullahi, outlining critical bottlenecks affecting production, manufacturing, and exports across multiple value chains.

The memorandum highlighted the urgent need to harmonize VAT on agricultural inputs and produce, citing unpredictable tax shifts that have undermined long-term business planning. Stakeholders also raised concerns over more than KSh 150 billion in pending VAT refunds—delays they say have forced companies to scale down operations or close altogether. They are calling for a one-off settlement through a special bond.

Another point of contention is the high cost of packaging materials, especially Kraft paper, where excise and other duties push total charges to as high as 60 percent. Producers argue this makes Kenya’s processed exports more expensive and less competitive globally, urging for agricultural packaging exemptions.

Farmers also expressed difficulty complying with the new eTIMS system and requested an extended grace period, warning that rushed enforcement could push them into informal markets dominated by brokers—ultimately hurting value chains and farmer earnings.

On the trade front, stakeholders noted that Kenya is losing ground due to uneven tariff regimes. India, for instance, imposes a 30 percent tariff on some Kenyan exports while offering zero-rated access to products from Uganda and Tanzania. They called for urgent bilateral negotiations to open fair market opportunities.

Domestically, the proposed 2 percent land rate on farmland sparked strong reactions, with stakeholders warning the move will burden farmers already grappling with rising input costs. They asked counties to exempt agriculture or significantly lower the rate. The widespread practice of charging cross-county cess—despite being unconstitutional—was also flagged as a major impediment to free movement of produce.

Regulatory levies also came under scrutiny, with stakeholders arguing that duplicated and overlapping charges have made Kenya one of the most expensive agricultural producers in the region. They want a comprehensive review, including reconsideration of the proposed 0.2 percent standards levy by KEBS.

In response, Treasury PS Dr. Kiptoo assured the sector that the concerns will be factored into the national budget process and forthcoming tax reforms under the National Tax Policy and Medium Term Revenue Strategy.

“As we work on harmonizing tax, we are also considering a one-off payment of VAT refunds alongside pending bills to ensure industries do not close down,” he said, adding that a joint review with regulators will evaluate which levies can be reduced.

Council of Governors Chair Governor Abdullahi acknowledged the burden of cess and confirmed that cross-county charges are illegal. He pledged that the matter would be forwarded to the COG Agriculture Committee for action, including a relook at land rates which, he said, had been initially proposed for multinational tea estates rather than small-scale farmers.

CS Kagwe urged both the public and private sector to embrace innovation, stressing that technology—particularly AI—offers a path to higher productivity despite limited arable land.

“Land is finite, but with modern technology we can significantly increase yields per acre. We cannot be left behind,” he said. He also cautioned exporters against unethical practices that compromise Kenya’s global reputation, calling for stronger self-regulation and adherence to quality standards.

The memorandum was jointly presented by key private sector bodies including ASNET, Fertilizer Association of Kenya, Cereal Growers and Millers associations, Kenya Flower Council, FPEAK, KTDA, KTGA, Kenya Dairy Producers, AKEFEMA, Poultry Farmers Association, Leather Apex Society, the Macadamia and Avocado societies, and veterinary associations.

The ministry committed to escalating unresolved issues—including VAT refunds and pending bills—directly to the Cabinet.