Sugarcane farmers have opposed the proposed 16 percent value-added tax (VAT) on transportation of sugarcane, on grounds that it will slow down the recovery of the sector whose fortunes have dwindled over the years.
Through the Kenya National Federation of Sugarcane Farmers (KNSF), farmers have pointed out that the proposals contained in the Finance Bill 2024 could see cane farmers incurring an additional cost of Sh2 billion annually.
Considering that the 16 cane millers produce a total of 1.2 million metric tonnes of the sweetener annually, cane growers noted that imposing a 16 percent VAT will translate to Sh164 million on a monthly basis.
The federation’s chairman Ezra Okoth while terming the proposal as ‘punitive and discriminatory’ said it is unfair to target sugarcane while leaving out other crops.
“We the sugarcane farmers feel this is discriminatory since we have been singled out and the same does not apply to other crops,” he said.
The Bill that is currently undergoing public participation proposes to introduce the new levy on the transportation of sugarcane to the factories for milling.
“Kindly note that the current cost of production is substantially high and the industry is bleeding due to a myriad of challenges,” said Mr Okoth.
“With the introduction of VAT, production of the critical raw material will be crippled.”
He cautioned that allowing importation of duty-free sugar and adding more taxes on transport on agricultural crop is working against local farmers.
“Why is the government keen to promote sugarcane farming in other countries and killing local farming?” he posed.
KNSF while appealing for the scrapping of the proposal pointed out that its implementation will have an adverse impact on the economic recovery of the turbulent sector.
Kenya Association of Sugarcane and Allied Products (Kasap) chairman Charles Atiang’ has however welcomed President William Ruto’s pledge to pump in Sh2 billion to go towards sugarcane development.
Speaking during the celebration of the 61st Madaraka Day celebration in Bungoma yesterday, the Head of State announced that the National Treasury will release the first tranche of Sh600 million for seed cane development this week.
Dr Ruto pointed out that the new leasing model of five public mills will ensure sugarcane farmers get prompt payments and receive bonus at the end of every year, just like other farmers in the tea and coffee sub sectors.
