Day-old chicks crisis hits Kenya after new tax cuts production

The country has been hit by a shortage of day-old chicks after the State introduced a 25 percent excise duty on imported fertilised eggs from July 1, a poultry industry association has said.

The Kenya Poultry Breeders Association (KPBA) said production of day-old chicks would drop by 28.57 percent to one million this week from an average of 1.4 million per week.

Hatcheries have been relying on imported fertilised eggs from Turkey to meet the high demand from local egg incubators amid disruption caused by the Covid-19.

“The breeders have depleted their egg banks. We require 450,000 eggs per week. We get the hatching eggs from Turkey because we do not have enough parent eggs in the country and EAC, due to the Covid-19 pandemic,” said the KPBA.

In the newly passed Finance Act 2021, all imported eggs attract two types of excise duty such as fresh/table eggs (tariff 0407.21, 0407.29 and 0407.90) and fertilised eggs for incubation/hatching (tariff 0407.11 and 0407.19).

Whereas the duties serve to protect local farmers from cheap imports, it has made it difficult for hatcheries to import fertilised eggs to bridge the deficit.

In April, Kenya protested 18 percent value-added tax, a six percent withholding tax, and a one percent railway levy on its poultry product accessing the Uganda market.

In retaliation, the Federation of Poultry Farmers last year asked the government to impose similar taxes on Ugandan poultry products to create a level playing field.

“Day-old chick prices will go up, making poultry farming uncompetitive. A massive shortage of day-old chicks will dampen the poultry industry growth.

“Hatching eggs will be expensive. Breeders may import day-old chicks leading to job losses for those involved in hatchery operations,” the association adds.