Farmers are expected to part with a new 0.25 percent levy on gross value of their harvests traded on the planned agricultural produce exchange.
The Kenya National Multi Commodities Exchange (Komex) had been scheduled to start mock trading on January 29, 2024, and go live on February 26, 2024, but the kick-off has been postponed.
Proposed regulations by Treasury Cabinet Secretary said farmers would be charged a regulatory fee on their commodity traded and deducted from their earnings.
“The Capital Markets (Commodity Markets) Regulations 2020, have been amended to introduce fees to support regulatory oversight over licensed entities in the commodities sector,” CMA indicated.
At the same time, the exchequer has moved amendments to the coffee exchange regulations introducing a transaction fee, also set at 0.25 percent of the gross value of commodities traded at the coffee exchange.
“An exchange shall collect a transaction fee, payable to the Authority, on all transactions at the exchange and such fee shall be deducted from the proceeds payable to the seller,” reads the amendment. The levy is expected to add to deductions targeted at growers as the government sets its sights on more taxes from agriculture.
The government is for instance eyeing at least Sh14.3 billion in additional revenue in the proposed withholding tax of five percent on farm produce sold through co-operatives.
The sector has been targeted to anchor the medium-term revenue strategy with the exchequer listing it among the hard-to-tax segments of the economy, alongside the informal and digital sectors.
The Trade and Investment Ministry had outlined January 29 as the date scheduled for the commencement of mock trading for Komex and a go-live date on February 26.
The exchange is tipped as an online marketplace where buyers and sellers can trade in commodities with an assurance of quality, delivery, and payment. Komex will begin with the spot trading of commodities before the introduction of derivatives trading in futures, options, and index trading later.
The exchange is expected to draw produce from Kenya, Uganda, and Rwanda which have signed cooperation agreements for 18 commodities.
Komex will operate warehouses where farmers will deposit produce for storage pending a decision to sell when prices improve.
Sectors covered by the exchange include agriculture, metals, minerals, and energy. The exchange has also outlined plans to diversify into the trading of currencies and other asset classes.
The value of select crops sold through marketing boards including co-operative societies and factories stood at Sh286 billion as of the end of 2022 according to data from the Kenya National Bureau of Statistics (KNBS).
Sold at an exchange, growers of the crops would be expected to part with Sh715 million as the regulatory fee that marginally trims their earnings.
