Kenyan sorghum farmers set to bag more earning in a new EABL trade deal

KENYA – The East African Breweries Limited (EABL) has entered into a trade deal with Sorghum farmers of Tharaka-Nithi county in Kenya that will see the farmers sell their produce directly to the brewer, eliminating middlemen who offer poor prices.

The sorghum farmers, according to reports by Business Daily, will be required to deliver their produce to the nearest county cereal stores where EABL aggregators will be buying from.

In addition, the partnership will see farmers benefit from extension services such as offering of seeds that will improve quantity and quality of the sorghum.

EABL has contracted over 47,000 sorghum farmers across the country to meet the 20,000 metric tonnes annual demand of the cereal used in making Senator Keg beer currently produced at its Kisumu plant.

EABL head of Emerging Business Joel Kamau said out of 47,000 farmers who sell sorghum direct to the brewer, 17,000 come from Tharaka-Nithi County which is also the second-biggest producer in the country behind Meru County.

“Tharaka-Nithi County produces 858,000 tonnes of sorghum annually making it the second-biggest producer in the entire country,” said Mr Kamau.

So far the brewer has paid over Ksh.1.1 billion (US$10.2m) to sorghum farmers contracted countrywide.

Tharaka-Nithi Governor Muthomi Njuki said, “The partnership is a game-changer for sorghum farmers in the county.”

He further appealed to the company to consider setting up a Keg factory in the county promising to offer free land and other incentives to reduce cost of transporting the sorghum which will further cut prices.

Mr Njuki who is also the Council of Governors (CoG) Agriculture Committee Chairperson, asked the national government to shelve plans to increase tax levied on beer made from cereals such as Senator Keg, arguing that it will deal a big blow to farmers.

The National Treasury of Kenya has proposed to review regulations that offer huge tax breaks to brewers using sorghum, millet and cassava in making the Keg beer from 80 per cent to 60 per cent.

The Excise Duty (Remission of Excise Duty) (Amendment) Regulations, 2017, allows the manufacturers of Keg that is largely consumed by low income earners, to make an application to the Cabinet secretary Treasury to grant remission of excise duty at 80 per cent.

Treasury CS Ukur Yatani however, proposed to review this remission downward to 60 per cent in the draft Excise Duty (Remission of Excise Duty) (Amendment) Regulations, 2020

Mr Njuki said increase on the tax will lead to rise in beer price, result in decreased consumption and subsequently compel manufacturers to cut production and scale down quantities of the raw materials.

He added that such a move will also be a blow to the government since low income consumers will turn to dangerous illicit brew leading to deaths and other crimes.

At least 21 counties including Tharaka-Nithi, Meru, Kisumu, Narok, Machakos, Bungoma and Vihiga grow sorghum in large quantiles, mainly for commercial purposes and interfering with the business will definitely kill their business.

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