GOVERNMENT, FARMERS, HOLD TALKS TO REDUCE COSTS AND IMPROVE AGRICULTURAL GROWTH

Cabinet Secretary Mutahi Kagwe addresses stakeholders during the high-level agricultural sector meeting held at Pride Inn Hotel in Nairobi.(Photo credits)

By: Gladys K

Agriculture Cabinet Secretary Mutahi Kagwe Tuesday met with leaders from across Kenya’s agricultural sector to discuss how to reduce rising production costs, fix regulatory challenges, and ease taxation pressures affecting farmers and agribusinesses.

The breakfast meeting brought together senior government officials, including Treasury Principal Secretary Dr. Chris Kiptoo, Agriculture Principal Secretary Dr. Paul Ronoh, Livestock Principal Secretary Jonathan Mueke, and Kenya Revenue Authority (KRA) Commissioner for Micro and Small Taxpayers George Obell. The goal was to gather practical proposals ahead of the next budget and find ways to remove barriers affecting farmers and processors.

CS Kagwe said the government wants farmers to earn more and stressed that regulations should support, not hinder, productivity.
“We are here to understand the real situation and what changes will genuinely raise farmer incomes. If a regulator charges a levy, there must be a service provided. If there is no service, the charge makes no sense,” he said.

He encouraged value chain players to give clear, realistic solutions.
“If something has to be removed, show us how the impact can be recovered elsewhere,” Kagwe added.

Agriculture PS Dr. Paul Ronoh said the ministry is working to improve efficiency across value chains but admitted that multiple regulatory charges are slowing sector growth. He cited issues in fertiliser blending, inconsistent input taxes, and challenges in seedling production and extension services. Ronoh also noted shortages of certified seedlings—especially in coffee—and revealed plans to expand seed production through research institutions. He supported bringing private distributors into the subsidized fertiliser programme to improve access and accountability.

Livestock PS Jonathan Mueke raised concerns from livestock producers and exporters who face many charges at exit points, ports, and under new tax rules affecting sourcing and aggregation.
“Livestock producers and exporters face layers of charges that reduce their earnings,” Mueke said. He added that dairy processors are struggling with high packaging taxes, expensive regulatory fees, and new compliance requirements.

Sector representatives complained about unpredictable VAT changes, rising levies, and high packaging costs such as kraft paper, which attracts a 25% excise duty. They warned that over-taxing formal producers pushes consumers toward informal markets, raising food safety risks and reducing government revenue. Stakeholders from tea, dairy, horticulture, macadamia, and grain sectors also noted increasing county cess charges, inspections, and turnover-based levies that raise operating costs.

Treasury PS Dr. Chris Kiptoo acknowledged these difficulties but said any policy change must consider Kenya’s tight financial space.
“Revenues have grown, but expenditures have grown even faster. The Treasury must balance support for agriculture with the country’s financial stability,” he said.

Kiptoo said Kenya loses over Sh500 billion annually through tax exemptions, some of which may need review to stop revenue leakages. He promised a joint review of all regulatory levies to determine their value and reduce or restructure those that burden farmers. On VAT refund delays, he said the Treasury is considering a one-time allocation to clear pending payments.

KRA Commissioner George Obell reassured farmers that smallholders who do not earn taxable income are not required to pay income tax.
“Taxes are paid on income. If a farmer has not made taxable income, they should not worry,” he said. He added that KRA will increase sensitisation on compliance and explore friendlier approaches that do not push farmers into the informal sector.

CS Kagwe closed the meeting by calling for follow-up engagements and more investment in agriculture.
“Agriculture remains the backbone of the economy and must be supported through predictable, transparent, and fair regulation. Let us refine these proposals and move from discussion to action,” he said.

Agriculture continues to drive Kenya’s economy by supporting livelihoods, boosting GDP, and ensuring national food security. The government says it remains committed to working with farmers, agribusinesses, and development partners to build a stronger, more competitive, and food-secure nation. Treasury PS Dr. Chris Kiptoo and Livestock PS Jonathan Mueke were present, showing a unified government approach to strengthening the sector.