Bill tabled in Parliament this month proposes the tax, allows counties to impose cess
The one per cent fee on processed milk is payable to the Kenya Dairy Board (KDB).
Kenya Dairy Processors Association chairman Nixon Sigey has said previously that the proposed fee will be a burden to consumers.
Milk consumers will pay more for the product if plans to introduce a one per cent levy on processed goods and cess to be charged by county governments are adopted by Parliament.
Statute Law (Miscellaneous Amendments) Bill 2018 proposes a one per cent fee on processed milk payable to sector regulator Kenya Dairy Board (KDB).
The Bill also allows counties to impose cess on milk or milk products processed within the devolved units.
“There shall be payable to the board by every producer a dairy regulatory levy at the rate of one per centum of ex-factory price per kilogramme of marketed processed milk and milk products,” reads the Bill that was tabled in Parliament this month.
Major processors are paying farmers Sh37 per litre of milk.
Brookside increased the price last week while New Kenya Cooperative Creameries has been paying farmers the above amount for some time now.
The country’s key processors are based in Nairobi, Kiambu, Uasin Gishu, Trans Nzoia and Kericho where they process a range of products that include butter, powder milk, ghee and long life milk.
However, the new changes will come as a relief to farmers as cess will no longer be deducted by processors on their monthly earnings as is currently the case.
The Bill proposes raising fines for milk producers who don’t register with the Dairy Board from Sh2,000 to Sh1 million.
The Bill will also make it mandatory for those operating milk dispensing machines, popularly know as milk ATMs, to obtain permits from the regulator.
They will also have to adhere to strict guidelines on handling and storage of the commodity.
Kenya Dairy Processors Association chairman Nixon Sigey said previously that the proposed fee will be a burden to consumers.
“Anything that proposes to increase the consumer price is not in our interest as processors. We would be very reluctant to make our products uncompetitive,” Mr Sigey said.
Local processors had indicated that they would be registering their concerns with the regulator.
However, the KDB said the changes are meant to consolidate its revenue collection.
Kenya has an annual processing capacity of 1.4 billion litres which translates to 3.9 million litres a day.
However, processors do not operate optimally due to some milk being diverted to the informal sector.
Milk intake in the formal market last year stood at a paltry 10 per cent of the total annual production, underpinning serious competition that processors face from informal vendors.
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