Tax on pesticides bad for the country
The past years have been tough for smallholder farmers, with emerging pests and diseases becoming a big challenge.
The voracious fall armyworm that attacks mainly maize and Tuta absoluta that hit the tomato crop nearly crippled the sector.
Timely intervention especially by the use of pest control products saved the day. And in a region where farmers have to contend with incessant proliferation of pests and diseases, pesticide have always been the saving grace.
It is, therefore, shattering that the government decided to introduce a 16 per cent value added tax on pest control products that were previously zero-rated.
The ripple effect across the agricultural value chain is set to be devastating, even as the move reverses the enviable gains the sector has made over the years.
Smallholder farmers, who cultivate less than one acre, form the bulk of Kenya’s food producers. The sector itself is the mainstay for 80 per cent of the rural population.
But their greatest threat has always been pests and diseases. In fact, they wipe between 40 per cent and 100 per cent of yields whether on farm or in post-harvest, according to Food and Agriculture Authority.
The latest move by the government, therefore, is set to hit farmers and consumers the hardest as manufacturers have already announced that they will raise prices of pesticides.
Cost of production
This will see a 50 per cent increase in the cost of production for farmers, which will ultimately raise the price of food and increase dependency on food imports.
Besides farmers, the tax will affect the pesticide value chain from importers, distributors and retailers, who earn a living from the trade, and some who might now be forced to close shop.
Studies show that agro inputs like pesticides, insecticides and fertilisers account for more than 50 per cent of the production gross margins for majority of agricultural commodity enterprises.
Increased demand for the pest control products that will now be unaffordable will also lead to proliferation of counterfeits as rogue traders take advantage of desperate farmers.
The development will have serious ramifications on food production and water down the work done in fighting fake agrochemicals.
The new tax equally hurts the fledgling manufacturing sector and efforts to bolster its competitiveness as locally made products fight for the same market with imported ones that are highly subsidised in country of origin. Kenya is now among the few countries taxing an area that governments world over have increasingly subsidised.
Lastly, the nation is coalescing around the transformative Big Four Agenda to guide the development agriculture, among other areas.
The agenda hopes to boost food production, but this will not be possible by making it hard for ordinary food producers to access basic inputs that are vital in growing yields.
The government should remove the tax on pest control products and save farmers the nightmare of facing pests and diseases and being unable to control them.