Kenya to remove VAT tax on vegetables farming seeds

The cost of producing vegetable seeds will drastically reduce if government waives Value Added Tax

Vegetables farming

Kenyan vegetable farmers will soon reap big, if the government zero rates Value Added Tax on vegetable seeds. This will see the cost of production reduce, thus making the sector competitive.

The Principal Secretary State Department for Livestock, Ministry of Agriculture, Livestock, Fisheries and Irrigation in Kenya, Harry Kimtai, announced recently that talks are at an advanced stage with the National Treasury, to waive tax on vegetable seeds.

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Speaking during the 10th Seed Trade Association of Kenya Congress, Expo and Mazao Forum 2022, held at the Kenya Agriculture and Livestock Research Organisation (KALRO) headquarters, Kimtai noted that the plan will reduce imports and make Kenya’s produce competitive.

He was representing the Cabinet Secretary for Agriculture Mithika Linturi at the event.
“We have discussed and engaged with Seed Trade Association of Kenya on how the tax issue can be addressed. We are going to have a meeting soon and give recommendations on the way forward. And we will consider advising the Treasury to remove VAT on vegetable seeds because that has proved costly to our farmers,” Kimtai said.

The vegetable seed sector in Kenya is estimated at Sh50 billion and employs directly or indirectly between 3.5 to 4 million farmers, largely youth and women.

However, Kenya imports vegetables worth about Ksh4bn mainly from neighbouring countries.

Most farmers have also resorted to buying seeds from neighbouring countries, further fueling counterfeit seeds that affect yields.

Vegetable seeds value chain actors who spoke to Smart Farmer Magazine said seeds from Uganda and Tanzania are cheaper due to the lower cost of production, as seeds in those countries are zero rated.

Humphrey Kiruaye, chairman Seed Trade Association of Kenya (STAK) noted that plans are in place to make Kenya’s vegetable seed sector competitive.

“We will be putting a plea and discussions with the agriculture minister and government officials on the VAT issue. There is cheap tomato, onion coming in from neighboring countries within the East Africa Community and that is partly because of the VAT regimes across both
countries. For example, whereas some neighbouring countries do not charge VAT on vegetable seeds, Kenya do charge on VAT on the seeds.

Mr Kiruaye noted that there is a lot of ongoing vegetable seeds breeding programs in the country

“There is a lot of breeding work that is starting to happen within our members. For example, KALRO is already working on a hybrid tomato seeds that will hit the market soon and this only shows that we are building capacity of the vegetable seed sector because, we have the expertise, breeders that is committed to this work,” said Kiruaye.

Kiruaye further noted the seed sector has put in place traceability systems to enhance quality seeds within the East Africa Community.

“We have seen good adoption of seed sticker labels and we are still educating farmers to make sure that they scratch and send the code to 1393 to reveal whether the seeds are fake or not. We are seeing countries like Tanzania, Uganda copying us, and even Rwanda is already gaining interest and doing studies to adopt this traceability system,” Mr Kiruaye added.

Meanwhile, Kimtai also hinted that idle land belonging to government institutions will be mapped out to boost seed multiplication across the country.

“Lack of available land for seed production is another challenge in the sector. We have already written to all the
government agencies to submit the returns of the acreages that they hold and is not being utilised to surrender it so that it can be put in the data bank. We are working closely with the National Land Commission to achieve this.

“We have seen both multinational and regional seed companies showing interest in the venture with some willing to do rice production, livestock and seed lot” Kimtai noted.

By Clifford Akumu

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