KENYA NATIONAL FARMERS’ FEDERATION (KENAFF) POSITION ON THE PROPOSED WITHHOLDING TAX ON AGRICULTURAL PRODUCE

KENAFF HQ, Farmers Conference Center, Thogoto, Kikuyu – The Kenya National Farmers’ Federation (KENAFF) notes with grave concern the proposal by the government of Kenya to introduce a withholding tax rate not exceeding 5 per cent of the value of the produce delivered to cooperatives or other organized groups.

While KENAFF recognizes the importance of taxation for finance investments in human capital, infrastructure, and the provision of services for citizens, and the mismatched tax-to-GDP ratio in the agriculture sector, the federation asserts that lower tax revenue commonplace should not mean immediate or further taxing agriculture as a feasible option when our country’s economy needs stimulus.

KENAFF would like to draw attention to:

• Our country’s continued struggle with productivity and the chilling effects enhanced taxation will have to these efforts currently in place to enhance productivity;
• The proposed tax effect on foreign exchange; by restraining agricultural output, and increasing reliance on imports;
• The fact that Kenyan farmers already face a cocktail of taxes, levies, cesses and fees on farm produce and forestry products, and on farm inputs and services, which distort market prices and make farm produce uncompetitive in the domestic and international markets; and,
• Additional challenges faced by our farmers: exorbitant costs of inputs; sub-optimal financial and policy support; limited access to productivity-enhancing technologies; decreasing landholdings; declining soil quality; environmental degradation; climate change; weak extension services; poor access to markets etc.

Consequently, KENAFF proposes more long term rational, comprehensive, and tailored approaches, considering an already strained populace amidst the cost-of-living crisis:

1. A gradual phase-in plan for the proposal, supported by a foolproof framework that includes strengthened farmers organization, farmers' education, public participation, and efficient administration.
2. Building a credible national farmers database as a backbone for well thought out and properly targeted national, sub national and value chain focused fiscal policies designs. KENAFF, as the National Farmers’ Organization in Kenya is, indeed, rightfully placed and is willing to support the government of Kenya in this regard; and,
3. Deliberate government actions focusing on: scaling up and sustaining a coherent public investment plan in the agriculture sector; strengthening the policy, regulatory and financial aspects of Climate Smart Agriculture; improving farming techniques, innovations and management practices; investing in a solid national irrigation infrastructure; investing in a solid national agricultural and livestock education, research and training system; enhancing the provision of targeted crop, livestock, farm forestry, fisheries and aquaculture extension services; improved local markets; supporting establishment of better storage facilities; ensuring effective supply chains; building the capacity of and empowering farmers; and, nurturing favourable agricultural policies.

Finally, KENAFF calls upon the government of Kenya to consider these potential pitfalls and seek to find a balance between widening the tax net and supporting the crucial agriculture sector The Federation is ready to collaborate with the government in exploring wholistic approaches that prioritize sustained public investment in agriculture and encourages proactive measures to address sector challenges.

About Kenya National Farmers’ Federation (KENAFF)

KENAFF is the National Farmers’ Organization (NFO) in Kenya. It is a non-political, not-for profit and democratic membership-based organization with the core mandate to represent, articulate, promote and protect the interests of the farmers of Kenya through lobby, advocacy, policy action and farmer empowerment. This mandate is embodied in the KENAFF motto: The Farmers’ Voice/Sauti ya Mkulima. The mandate is operationalized through an elaborate organizational structure; starting at the ward, sub-county, county, and the national level with the National Farmers Assembly (NFA) and the KENAFF Annual General Meeting (KENAFF AGM). KENAFF was founded in 1946 as the Kenya National Farmers Union (KNFU) and now has a presence in all the 47 counties.