Rice, wheat flour prices to rise on new cereals’ custom levy
Starting August 12, Kenya has imposed a two percent levy on cereal imports, leading to higher prices for rice and wheat flour. This new charge, alongside existing import costs, adds significant expenses for traders, potentially increasing food prices for consumers. The Agriculture and Food Authority’s decision, initially set for July 1, has faced protests from traders and neighboring countries.
Kenyans should expect high prices of rice and wheat flour starting this month after the government imposed a two percent levy on cereals’ customs value.
Beginning August 12, all cereal and legume imports were slapped with a new levy introduced by the Agriculture and Food Authority (AFA) as traders protested additional importation charges.
The AFA imposed a two-percent levy on cereals on customs value for importation and a 0.3-percent levy for exportation.
In the new directive, the authority has slapped the same levy on legumes or pulses, while exports for roots and tubers will be charged a one percent import levy on customs value and 0.3 percent on exports.
The notice was made under Regulation 37 of the Crops (Food Crops) Regulations of 2019, which were to be effected from July 1 but pushed to August 12.
Traders who failed to pay the levy were to pay an interest rate of 25 percent on the outstanding amount for the first month of default.
However, with the new order, the customs value of cereals and legumes would see traders fork out an extra Sh20,000 for a truck of maize and Sh50,000 for rice on top of charges they have been paying to different State agencies such as Kenya Revenue Authority, Kenya Plant Health Inspectorate Service and Kenya Bureau of Standards (Kebs).
Apart from the AFA levy, importers would be required to pay another Sh3,000 for an AFA permit to import cereals and legumes, a Sh600 import permit charge and Sh7,500 inspection fees to Kephis, Sh1,100 port health charge, Sh1,100 biosafety charges, and Sh7,200 to Kebs for moisture and aflatoxin tests.
Shippers Council of East Africa CEO Agayo Ogambi said the charges are hindering business growth and would be an extra 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,” he said.
Chairman of the Kenya International Freight & Warehousing Association (Kifwa) Roy Mwanthi said importation of rice has stopped since AFA effected the levies on 12 August this year and it which will affect households as cost of rice is expected to increase.
AFA Director-General Bruno Linyiru said the protest has forced government to freeze the levies for a month to allow the regulator to address concerns raised by stakeholders.
“We anticipate serious shortage of rice and wheat due to the levies and those who import they will have to pass the cost to consumers. Currently rice from East African countries that would ordinarily be free are subject to high levies and is stuck in different border pints,” said Mr Mwanthi.
Mr Mwanthi said the recent commencement of imposition of levies on imports and exports of all food crops products from Kenya is very unfortunate as it is counterproductive and a huge non-tariff barrier to international trade in food crops.
The chairman said imposing higher taxes and levies on the already levied crops on basic foods crops will result to reduction on importation of the dame which will lead to high cost of such basic items.
This week, Tanzania traders protested Kenya’s move to levy a 2 percent customs value on their grain imports.
Since 2022, the government had rolled back taxes on food imports to slash the cost of essential products such as flour and rice.
At the beginning of this year, Kenya imported food products such as wheat, rice, maize, and sugar worth $172,393 million from Uganda, South Africa, European countries, India, and the United States, according to AFA.
Source Link : https://www.businessdailyafrica.com/bd/economy/rice-wheat-flour-prices-to-rise-on-new-cereals-custom-levy-4738890
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