Sugarcane farmers are opposing the proposed 16 per cent value-added tax (VAT) on the transportation of sugarcane, arguing that it will hinder the recovery of a sector that has struggled for years.
Represented by the Kenya National Federation of Sugarcane Farmers (KNSF), farmers highlight that the Finance Bill 2024’s proposals could cost them an additional Sh2 billion annually.
With 16 cane millers producing a total of 1.2 million metric tonnes of sugar annually, cane growers estimate that the 16 per cent VAT would result in an additional Sh164 million per month. KNSF Chairman Ezra Okoth described the proposal as ‘punitive and discriminatory,’ noting that it unfairly targets sugarcane while exempting other crops.
“We, the sugarcane farmers, feel this is discriminatory since we have been singled out and the same does not apply to other crops,” he said.
The Bill, currently under public review, aims to introduce this new levy on the transportation of sugarcane to factories for milling.
“The current cost of production is already significantly high, and the industry is suffering from numerous challenges,” said Mr. Okoth. “Introducing VAT will cripple the production of this critical raw material.” He warned that allowing duty-free sugar imports while imposing additional transport taxes on local crops harms domestic farmers.
“Why is the government promoting sugarcane farming in other countries while undermining local farming?” he questioned.
KNSF, appealing for the proposal to be scrapped, emphasized that its implementation would negatively impact the economic recovery of the struggling sector.
On a more positive note, Kenya Association of Sugarcane and Allied Products (Kasap) Chairman Charles Atiang’ welcomed President William Ruto’s commitment to invest Sh2 billion in sugarcane development. Speaking at the 61st Madaraka Day celebration in Bungoma, the President announced that the National Treasury would release an initial tranche of Sh600 million for seed cane development this week.
Dr. Ruto highlighted that a new leasing model for five public mills would ensure sugarcane farmers receive prompt payments and annual bonuses, similar to those in the tea and coffee sectors.
