New pes­ti­cides tax could fuel trade in coun­ter­feits

The East African - - BUSINESS - By NJIRAINI MUCHIRA Spe­cial Cor­re­spon­dent

A DE­CI­SION by Kenya to in­tro­duce value added tax on pes­ti­cides has sparked con­cerns of a po­ten­tial in­flux of il­le­gal im­ports and coun­ter­feits in East Africa.

The 16 per cent VAT on crop pro­tec­tion prod­ucts be­came ef­fec­tive on July 1. In Tan­za­nia and Uganda, the prod­ucts re­main zero-rated.

Agro­chem­i­cal com­pa­nies now fear farm­ers will no longer af­ford gen­uine prod­ucts, lead­ing to an in­flux of coun­ter­feits.

It is es­ti­mated that Kenya losses $50 mil­lion an­nu­ally in rev­enue to un­reg­is­tered agro­chem­i­cals deal­ers and coun­ter­feit pes­ti­cides. In­dus­try in­sid­ers say 18 per cent of pest con­trol prod­ucts in the coun­try are coun­ter­feits. In Tan­za­nia and Uganda the fig­ure rises to 40 per cent and 45 per cent re­spec­tively.

“With the tax­a­tion, il­le­gal im­ports from the re­gion will in­crease thereby harm­ing the local in­dus­tries,” said the Agro­chem­i­cal As­so­ci­a­tion of Kenya’s chief ex­ec­u­tive Eve­lyn Luse­naka.

Ms Luse­naka said that the VAT will also in­crease the cost of agri­cul­tural pro­duc­tion,and even­tu­ally im­pact on food se­cu­rity — one of four pil­lars in the Ju­bilee gov­ern­ment’s Big Four Agenda. The oth­ers are man­u­fac­tur­ing, uni­ver­sal health­care and af­ford­able hous­ing.

It is es­ti­mated that pests and diseases ac­count for 40 per cent of crop losses, and in some cases can cause 100 per cent loss, par­tic­u­larly with the emer­gence of pests like the fall army­worm. In re­sponse, the re­gion has wit­nessed a steady in­crease in the use of pes­ti­cides with Kenya im­port­ing about 14,700 tonnes at a cost of $124 mil­lion last year. This is a 9.6 per cent in­crease from the 14,600 tonnes im­ported in 2016 at a cost of $112.3 mil­lion. In Tan­za­nia and Uganda, im­ports stood at 11,000 tonnes and 9,000 tonnes re­spec­tively last year.

While the in­crease in pes­ti­cides use saved farm­ers from crop losses, it has also re­sulted in a surge in coun­ter­feits and il­le­gal im­ports.

“Favourable tax­a­tion has helped to keep pes­ti­cides af­ford­able thereby en­sur­ing im­proved yields due to re­duced losses as­so­ci­ated with pests and diseases. Now th­ese gains will be eroded,” said Ms Luse­naka.

Pic­ture: File

Work­ers spray a maize crop with pes­ti­cides to kill the fall army­worm in in Uasin Gishu County in Kenya’s Rift Val­ley.

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.