New levy to increase food imports cost starting July


Traders that fail to pay the levy face an interest rate of 25 percent on the outstanding amount for the first month in which the trader default.

Photo credit: File | Nation Media Group

Kenya, which is a net importer of food, has slapped a two percent levy on import of cereals including maize, rice and wheat in what is set to raise the price of these commodities for consumers.

In a notice by the Agriculture and Food Authority (AFA), the government has also slapped a 2 percent levy on the custom value of imports of legumes and pulses including beans, lentils, soybeans and peanuts, and a 1 percent levy on the import of roots and tubers such as potatoes, cassava, sweet potatoes and yams.

The levies will take effect on July 1, said AFA.

“The Authority through the Food Crops Directorate hereby notifies all food crops importers and exporters that starting July 1, 2024, the imposition of levies will commence as provided for in regulation 37 sub-regulations (1) to (8) of the Crops (Food Crops) Regulations, 2019,” said AFA Director-General Bruno Linyiru in a notice.

The regulations empower AFA to impose the levy, which is to be paid by traders “not later than the tenth day of the month following the month during which the levy fell due”.

According to the regulations, the levy will be used to fund the operations of AFA, develop the food crops sub-sector and “such other purpose as may be approved by the Authority”.

Traders that fail to pay the levy face an interest rate of 25 percent on the outstanding amount for the first month in which the trader default.

Thereafter, the traders will be charged a compound interest of 12 percent on the outstanding arrears.

But the imposition of the levy is a major blow to consumers who are already paying high prices for food commodities amid soaring production costs and production shortages.

Kenya is a net importer of food products primarily maize, rice, wheat, with local production lagging way behind demand amid a rapidly growing population.

In 2023 for instance, Kenya imported 2 million tonnes of unmilled wheat, 937,098 tonnes of rice and 507,932 tonnes of unmilled maize, according to the Economic Survey, 2024.

“In 2023, import volumes for food commodities rose significantly except maize. The increase was largely driven by high demand for food commodities in the country to alleviate hunger, following a prolonged drought in the first half of 2023 that affected domestic production,” said the Kenya National Bureau of Statistics (KNBS).

AFA has also slapped a 0.3 percent levy based on the customs value of exported cereals, legumes and roots and tubers. This is set to hit the pockets of exporters and in turn diminish the earnings of farmers while making the cost of Kenya’s food produce uncompetitive in the destination markets.

The cost of food plays a leading role in Kenya’s inflation, with an increase in the prices of food raising the cost of living for consumers.

This also comes at a time the government has proposed a litany of new tax measures through the Finance Bill, 2024, which could significantly raise the cost of living should they be passed.

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