Agricultural Produce Cess, Threat to Kenya’s Flower Industry – KFC

NEW GOVERNMENT AGRICULTURAL PRODUCE CESS, THE BIGGEST THREAT TO RECOVERY OF KENYA’S FLOWER SUB-SECTOR

Workers in the grading hall of Harvest Limited Athi River flower farm. They defoliate, size, bunch, and pack the bouquets. Harvest Ltd has been Fairtrade certified since 2011.

Kenya Flower Council, the representative body for growers, exporters and relevant cut-flower and ornamentals value chain actors, says implementation of the Horticulture (Crops) Regulations need to be halted.

The council in a statement Tuesday said the implementation of the regulations which took effect on January 1st have increased Agricultural Produce Cess levy from the previous 30 cents per kilo to 0.25% of the customs value. 

“This translates to at least four times what exporters have been paying until December 2020,” Clement Tulezi, CEO KFC said.

“We would like you to note that despite our continued engagement on the Horticulture (Crops) Regulations throughout 2019, there has been no official communication by neither the Ministry of Agriculture, Agriculture and Food Authority nor the Horticultural Crops Directorate on the Final Outcome of the bill,” says Tulezi. 

According to Tulezi, payment of CESS has been done in arrears after export. However,  the demand for pre-payment of CESS on free on board is costly and will be cumbersome to administer. 

“The passing and implementation of the Horticulture (Crops) Regulations are being undertaken without proper consultation with the industry players,” he says adding that, “This arbitrary increase will definitely kill the industry that is still struggling to recover from the impact of COVID-19 pandemic.”

“This directive is against the spirit of facilitating trade and creating a conducive business environment. We propose that the implementation of these regulations to be halted to allow for proper consultation with the stakeholders,” says the Council.

The flower export industry ranks among the top four foreign exchange-earners for Kenya.