Markets & Finance
Sorghum farmers call for review of tax on keg beerSunday October 05 2014
Sorghum farmers want the Treasury to review the 50 per cent excise duty imposed on keg beer in this year’s budget, saying it is hurting production. The farmers complained that demand for sorghum by East Africa Breweries Limited (EABL) has declined since the implementation of the law.
During a forum organised by the Alliance for Green Revolution in Africa (Agra) in Nairobi on Friday, Antony Kioko, CEO Cereal Growers Association, said EABL has been the catalyst in the sorghum market, being the biggest buyer for the white variety (gadam) in Kenya.
READ: Drop in Senator sales hits 20,000 sorghum farmers
A research conducted by thinktank Tegemeo Institute indicates that farmers’ forgone income from sale of sorghum to EABL was Sh180 million in 2013/14 financial year. EABL has 60,000 contracted farmers from arid and semi-arid regions of the country.
The Tegemeo data shows that participation of EABL in the sorghum market boosted grain production to 12,715 tonnes in 2012 from a low of 474 tonnes.
The government in 2013/2014 introduced 50 per cent excise duty on beer made from sorghum, millet or cassava. This pushed up the cost of production of a litre of keg beer to Sh35. EABL has since reduced utilisation of sorghum to 12 per cent from 24 per cent earlier.