Kenyans To Pay More For Rice And Wheat Flour As Govt Implements New Levy

• The Kenyan government has implemented new levies on imported cereals, including rice and wheat flour, leading to increased prices for these products
• The Agricultural Food Authority (AFA) introduced a 2% levy on the customs value of imported cereals and a 0.3% levy on cereal exports
• Importers are facing additional costs, with a truck of maize incurring an extra KSh 20,000 and a truck of rice costing an additional KSh 50,000

Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research expertise, providing insights into Kenyan and global trends.

Kenyans will experience higher prices for cereals after the government put into effect a new levy on imported cereals.

The Agricultural Food Authority (AFA) implemented a 2% levy on the customs value for the imported cereals and a 0.3% levy on the exportation of the same.

According to a report by Nation, the new levies are expected to result in additional costs for importers; for example, a truck of maize will now incur an extra KSh 20,000, while a truck of rice will cost an additional KSh 50,000.

These costs are in addition to existing charges levied by various state agencies, such as the Kenya Revenue Authority, the Kenya Plant Health Inspectorate Service, and the Kenya Bureau of Standards (KEBS).

Traders criticise new levies

Business Daily further reported that the levy has drawn criticism from industry stakeholders, including the Shippers Council of East Africa, whose CEO, Agayo Ogambi, argued that the charges would hinder business growth and impose an undue burden on farmers and exporters.

"The levies and more taxes on exports will make our products uncompetitive in East Africa and Comesa. Already, Uganda and Tanzania are up in arms against the imposition of the levies," said Ogambi.

Roy Mwanthi, Chairman of the Kenya International Freight & Warehousing Association (Kifwa), highlighted the immediate impact of the levy, noting that the importation of rice had already stopped.

He warned that this would lead to a rise in rice prices, affecting households across the country.

In response to growing protests, AFA Director-General Bruno Linyiru announced that the government had decided to temporarily freeze the levies to allow the regulator to address concerns raised by stakeholders.

However, Mwanthi cautioned that if the levies are reinstated, consumers will likely bear the brunt of increased costs.

Similar sentiments were aired by Dan Kathali an economist in an exclusive interview with TUKO.co.ke. He said,

"The new taxes on imported cereals will have a direct impact on the market, which is an increase in the prices of the affected cereals. This is because an increase in the importation cost will be shifted to the final consumers, who are mostly low-income earners. Due to an increase in the shelf prices of this crucial foodstuffs, the immediate response by some households will be to shift their demand to close substitutes of maize, wheat,rice and any other affected cereals. In the short run, keeping other factors constant, the consumers will be forced to continue grappling with higher cost of living."

Kenya Seed Company increases maize seed prices

Kenya Seed Company announced a significant increase in maize seed prices, sparking widespread anger among Kenyan farmers and traders.

In a post on its Facebook page, the company explained that the adjustments were due to rising production costs and market fluctuations.

A 2kg packet of maize seed will now cost KSh 600, up from KSh 420, while a 10kg pack will retail at KSh 3,000 from KSh 2,000.

Kenya Farmers Association director Kipkorir Menjo told TUKO.co.ke that maize prices would now be unaffordable to most farmers.

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Import taxes on cereals in Kenya.

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Rice, wheat flour prices to rise on new cereals’ custom levy - Business