President Uhuru Kenyatta on Tuesday directed the National Treasury to impose 16 percent Value Added Tax (VAT) on milk products that have originated from outside the East Africa Community(EAC) in a bid to cushion local farmers from imported cheap milk.
The move by the President comes amidst cries from Kenyan dairy farmers who have protested the influx of cheap milk from neighboring countries like Uganda, which has led to decline in prices.
Milk farmers across the country have blamed the influx of cheaper processed dairy products from neighbouring countries for the reduced prices.
Currently, milk is bought from farmers for as little as 18 shillings ($0.18) per litre and the cost of production is at 30 shillings ($0.30) per litre
“In the agricultural sector, our farmers have continued to get high milk yields. However, due to the excess supply, they are receiving very low prices for their milk,” said Kenyatta while addressing the nation from the coastal city of Mombasa.
“The situation has been exacerbated by the incursion of powdered milk which is smuggled into Kenya from outside our Eastern Africa Region. This has caused financial hardship to dairy farmers,” he added.
The President further directed National Treasury to release a further 575 million shillings ($5.6 million) to new Kenya Cooperative Creameries(KCC) for the construction of milk plants in Central Kenya to purchase excess milk from farmers to convert it into powder milk for future use.
The President said the move is meant to boost the milk industry with 1.07 billion shillings ($9.8 million) in the immediate run as a way of supporting farmer’s efforts.
Kenya produces about 5.2 billion litres of milk annually. Of this, five per cent is exported to Tanzania, Uganda and the Middle East, while the rest is consumed locally.
JK/abj/APA