Kenya imposes 10% import levy on dairy products to boost local industry

KENYA – Kenya has imposed a 10% import levy on dairy products, a move that seeks to cushion the local dairy farmers from unfair competition brought about by unregulated imports.

Earlier this year, a mini trade war erupted between Kenya and Uganda, after milk imports from the latter were impounded at the border on claims that the products had been illegally imported in the country, leading to a temporary ban on the importation.

This was followed by the Kenyan government resolving to impose 16% value added tax (VAT) on milk imports from Uganda in January after a bilateral meeting between trade officials from the two countries.

The Ministry of Agriculture published the dairy industry regulations that have also introduce other stringent conditions where milk processors in Kenya will no longer set and adjust farm gate prices at will, which they apply when there is either a shortage or a glut.

The regulations are a departure from the controversial draft published last year, which was shelved after farmers termed it punitive and draconian.

Last week, Brookside Dairy adjusted raw milk prices upward by one shilling per litre to Ksh36 (US$0.34) from Ksh35 (US$0.33) to cushion farmers from the effects of the Covid-19 pandemic.

“We decided to increase farm-gate prices of milk, which will not only boost dairy farming businesses but also help minimise the negative financial impact of the coronavirus outbreak,” said John Gethi, Brookside Milk Procurement and Manufacturing director.

According to the new regulations, the Agriculture cabinet secretary in consultation with the Kenya Dairy Board will determine the minimum farm-gate prices based on factors such as cost of production, transport and statutory deductions.

Even though Kenya has about 40 milk processors, the top three—Brookside, New KCC and Githunguri Dairy—control about 80 per cent of the formal milk industry.

At the same time, Kenyan Poultry farmers have urged the government to impose taxes on products from Uganda to create a level playing field and protect the industry from dumping.

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According to The East African, Uganda has imposed a cumulative 25 per cent duty on Kenyan poultry products – 18 per cent VAT, 6 per cent withholding tax and 1 per cent road levy while export products from Uganda enter Kenya duty free.

In a recent letter addressed to Livestock Principal Secretary Harry Kimutai, the Kenya Poultry Breeders Association (KPBA) claims some of the imports are from the US and Turkey and repackaged in Uganda as the country of origin.

In response the Poultry Association of Uganda chairman, said the allegations by Kenyan farmers were a familiar cry that offends the spirit of the East African Community integration.

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