Sugarcane farmers warn: Proposed tax on transport could cripple recovery efforts

Sugarcane farmers have cautioned that the proposed introduction 16 per cent Value Added Tax (VAT) on transportation of cane could dim the recovery of the sub-sector, whose fortunes have dwindled over the years.

Through the Kenya National Federation of Sugarcane Farmers (KNSF), they pointed out that proposals contained in the Finance Bill, 2024 could see cane farmers incurring an additional cost of Sh2 billion annually.

Considering that the 16 cane millers produce a total of 1.2 million metric tonnes of the sweetener annually, cane growers noted that imposing a 16 per cent VAT will translate to Sh164 million on a monthly basis.

The federation’s chairman Ezra Okoth while terming the proposal as ‘punitive and discriminatory’ said it is unfair to target sugarcane while leaving out other crops.

Transportation of sugarcane

“We feel this is discriminatory since we have been singled out and the same does not apply to other crops,” he said.

The Bill that is currently undergoing public participation proposes to introduce the new levy on the transportation of sugarcane to the factories for milling.

“Kindly note that the current cost of production is substantially high and the industry is bleeding due to a myriad of challenges.

“With the introduction of VAT in the transportation of sugarcane, production of the critical raw material will be crippled,” Mr Okoth said.

He cautioned that allowing the importation of duty-free sugar and more taxes is working against local farmers.

Implementation of tax

“Why is the government keen to promote sugarcane farming in other countries and killing local farming?” he posed.

KNSF pointed out implementation of the tax will have an adverse impact on the recovery of the sector.

Kenya Association of Sugarcane and Allied Products chairman Charles Atiang’ has welcomed President William Ruto’s pledge to pump in Sh2 billion into sugarcane development.

Speaking during the celebration of the 61st Madaraka Day celebration in Bungoma on Saturday, the president announced that the National Treasury will release the first tranche of Sh600 million for seed cane development this week.

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