The Ministry of Agriculture and Livestock Development, Cabinet Secretary (CS), Mutahi Kagwe has steered a high-level engagement between government and agricultural sector representatives, focusing on reducing regulatory bottlenecks, reviewing taxes and levies, improving farmer earnings, and safeguarding Kenya’s competitiveness across value chains.
The breakfast meeting brought together key government actors, including Treasury Principal Secretary (PS), Dr. Chris Kiptoo, Agriculture Principal Secretary, Dr. Paul Ronoh, Livestock Development Principal Secretary, Jonathan Mueke, and the Kenya Revenue Authority Commissioner for Micro and Small Taxpayers, George Obell.
The Session aimed at consolidating sector proposals for the upcoming Budget cycle and addressing longstanding concerns around taxation, compliance burdens, and high production costs.
Opening the dialogue, CS Kagwe emphasised that the government’s priority was to ensure farmers earn more from their labour and that regulatory frameworks support, rather than hinder agricultural productivity.
He called for clear and concise submissions that highlight actionable reforms stating, “We are here to understand the current situation and what changes will genuinely raise farmer incomes. If a regulator charges a levy, then there must be a corresponding service. If no service is being provided, it makes no sense to charge”.
Kagwe urged agriculture value chain actors, to avoid lengthy histories and instead present specific, measurable proposals, that balance sector needs, with government revenue demands.
He noted that while many players request tax waivers, the Treasury must still finance national priorities.
“If something is to be removed, show us how its impact will be recovered elsewhere,” he illuminated.
Agriculture PS Dr. Paul Ronoh, affirmed that the Ministry was committed to improving efficiency across value chains, but recognized that escalating regulatory charges, had undermined sector growth.
Dr. Ronoh highlighted that the Ministry had already noted rising fertiliser blending challenges, inconsistencies in input taxation, and barriers affecting seedling propagation and extension support.
“The issues raised here are not new, and many are already under review, our commitment is to align all agricultural interventions, to ensure they lower production costs and strengthen farmer-linked value chains,” he noted.
The PS added that the Ministry had identified significant gaps in the supply of certified seedlings, particularly in coffee and was working on mechanisms to fund the expansion of seed production and research institutions.
He also backed calls to ensure that private sector distributors are integrated into subsidized fertilizer distribution, saying this would enhance reach and accountability.
Livestock PS Jonathan Mueke, highlighted concerns from pastoral and livestock-exporting communities, regarding charges at exit points, port fees, and the impact of new tax classifications on animal sourcing and aggregation processes.
He revealed that the Ministry had documented industry constraints, including high cess fees, duplicative county permits and compliance obligations, that made Kenya less competitive than regional peers.
“Livestock producers and exporters are dealing with layers of charges that undermine their margins. We are reviewing these issues to ensure policies remain supportive and do not push businesses into informality, ” Mueke announced.
The PS added that the Ministry was also assessing challenges faced by dairy processors, including high packaging taxes, costly regulatory fees and the burden of enforcing farmer compliance with new tax systems.
Sector representatives shared concerns regarding unpredictable VAT shifts on agricultural inputs, increasing levies imposed by regulators, and high costs associated with packaging materials, especially kraft paper, which attracts a 25 percent excise duty.
They noted that restrictions on certain packaging materials had raised production costs, while bilateral trade constraints had negatively affected exports such as flowers, fruits and avocados.
Likewise, processors also warned that over taxation of formal producers, was pushing consumers and small traders toward the informal market, raising food safety risks and undermining government revenue.
In addition, representatives from tea, dairy, horticulture, macadamia and grains cited escalating county cess fees, inspections, certification charges and new turnover-based levies that cumulatively inflate the cost of doing business.
The Treasury PS Dr. Chris Kiptoo, acknowledged the breadth of sector challenges, but underscored that any policy shifts, must be reconciled with Kenya’s limited fiscal space.
He disclosed that nearly half of all revenue collected now, goes toward servicing debt, leaving limited flexibility for additional spending or tax waivers.
“We are operating in a very tight fiscal environment, revenues have grown, but expenditures have grown faster. The Treasury must balance the need to support agriculture with the need to keep the country financially stable,” Dr. Kiptoo affirmed.
Dr. Kiptoo observed that Kenya currently incurs over Sh500 billion annually in tax expenditures exemptions, zero-rating and incentive schemes, some of which may need review to plug revenue leakages.
Dr. Kiptoo, however, reaffirmed his commitment to working with the Ministry of Agriculture and Livestock Development, to address excessive and duplicative levies imposed by regulatory agencies.
“We will undertake a coordinated review of all levies charged by regulators, to assess value for money. Where there is scope to reduce or restructure charges, we will do so,” he assured
On concerns over chronic VAT refund delays, the PS announced that the Treasury was considering a one-off allocation, to clear pending refunds, subject to fiscal constraints.
He also pledged to support trade negotiations, aimed at reducing punitive tariffs in key markets, such as India.
The Kenya Revenue Authority (KRA) Commissioner, George Obell, addressed the sector’s concerns around eTIMS compliance and tax demands issued to farmers.
He assured participants that KRA does not expect smallholder farmers, earning below the minimum threshold, to pay income tax.
“Taxes are paid on income. If a farmer has not made taxable income, they should not be worried,” he reassured.
Obell vowed the Authority would intensify nationwide sensitization, to ensure farmers and aggregators understand tax processes, adding that KRA was open to sector-specific adjustments, where unique challenges exist.
“Our intention is not to punish businesses, but to support compliance and bring all eligible taxpayers into the net,” said the Commissioner.
He added that KRA would work with processors, to explore alternatives to direct farmer-level enforcement, acknowledging that some compliance mechanisms were pushing farmers back into informal channels.
CS Kagwe called for structured follow-up engagements and urged the Treasury, to consider incremental growth in agriculture funding.
The CS stressed that agriculture remains the backbone of the economy and must be supported through predictable, transparent and fair regulation.
“Let us refine these proposals and ensure we move from discussion to action,” he stressed.
By Darlene Kuria
