reduced losses associated with pests
and diseases,” Lusenaka says.
Two Steps Forward, One Step Back
The introduction of VAT now creates a
totally different environment. Coming
at a time when Kenya is struggling to
transform the agricultural sector and has
identified food security as a top national
priority, the move has left a bitter taste
with the nascent agchem industry,
which was on a growth trajectory.
It is estimated that pesticides
consumption in Kenya stands at
about 14 million kilograms annually
compared to a country like South
Africa at 35 million kilograms.
“The gains so far achieved in the
agriculture sector are likely to be
eroded,” Lusenaka says. She adds that
the compounded adverse effect would
be felt in terms of reduced agricultural
production, reduced incomes and
livelihoods for various value-chain players,
increased food insecurity, and reduced
agricultural sector growth and would
ultimately affect gross domestic product.
Worse still, the industry, which is already
suffering from problems of counterfeits
and illegal imports, could witness an
unprecedented surge in the menace,
particularly with products entering from
neighboring countries, such as Tanzania
and Uganda, where they do not attract VAT.
In Kenya a total of 18% of pest control
products are counterfeits, with the
situation being worse in Tanzania and
Uganda, where up to 40% and 45%,
respectively, are counterfeits.
“This is another risk for Kenya because
more illegal products will come from
neighboring countries because of
the price difference and high rates of
counterfeits,” Bureau says.
Another major concern is that, with
pesticides being out of reach for
farmers, pests and diseases will have
a field day. This is quite alarming
considering that pests and diseases
already contribute for 40% to 100% of
crop loss, a situation that is bound to get
worse with the emergence and upsurge
of new pests, such as the fall armyworm
and tuta absoluta among others.
For companies, the inability to push
products in the market could set in
motion a tragic trend of downscaling,
closing, or relocating to countries
with favorable tax regimes. It goes
without saying that, although Kenya
takes pride in its 85 agrichemical
companies, fewer than a quarter
control about 65% of the market, with
the others teetering on survival mode.
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