Small Scale Dairy Farmers Association chairperson Lydia Kagema during a news conference at the Public Service Club, Nairobi September 3, 2013. The Kenya Dairy Board (KDB) and dairy farmers asked the government to review the VAT Act to lower the cost of milk.
A statutory body and farmers want the government to review the VAT Act to lower the cost of milk.
The Kenya Dairy Board (KDB) and dairy farmers took issue with the imposition of the 16 per cent VAT on processed milk.
"We are going to talk to the parliamentary committee on agriculture and that of budget to amend the Act otherwise milk is going to be too expensive compared to our neighbouring countries and other countries in the world," KDB managing director Macharia Gichohi said Tuesday.
Addressing journalists after a meeting with dairy farmers at the Public Service Club in Nairobi, Mr Gichohi said the new law would make consumers ignore processed milk and increase the hawking of raw milk.
Mr Gichohi, Small Scale Dairy Farmers Association chairperson Lydia Kagema, Muhika Mutahi of the Kenya National Dairy Producers Organisation and Philip Kibusie of the Kenya Dairy Farmers Federation said a litre of milk which traded at Sh90 would now increase by 16 per cent due to VAT.
"The high cost of processed milk make it unaffordable to certain classes of consumers. This may worsen with the introduction of VAT 2013," Ms Kagema who read a statement on behalf of the farmers, said.
Although the government says "unprocessed" milk is exempted from VAT, Mr Gichohi said: "There’s no word like unprocessed milk."
ROLL BACK GAINS
The farmers said the new law will affect formalisation of the dairy industry roll back gains made so far.
The dairy industry supports 1.8 million smallholder farmers, employs 750,000 people and provides another 500,00 direct employment along the dairy value chain.
The sector contributes 4.5 per cent of the Gross Domestic Product.
Kenya produces about 5 billion litres of milk annually while deliveries to processors stood at 500 million kilograms last year.
On Tuesday, the farmers said they were committed to the establishment of an organised and developed dairy industry that is efficient and delivers quality to the consumers.
"The dairy farmers require support to enhance milk production by addressing the pricing of milk, managing the high cost of feeds and other inputs and providing quality extension services," Ms Kagema said.
She said dairy farmers are disappointed with the huge fluctuations in milk prices that has "acted as disincentive to milk production in Kenya and also encouraged diversion of milk to the informal sector".
The farmers also decried low milk producer prices offered by processors compared to informal traders.
Other things affecting dairy farmers are delayed payments by processors, rationing by creameries during flush periods and low commitment by the firms to honour contracts on supplies.
They warned that hawking of raw milk is a public health hazard due to the poor and unhygienic handling practices "that may predispose the milk to contamination and disease causing micro-organisms".
"Hawking of milk is associated with adulteration of milk with water and use of hazardous chemicals that pose a health hazard to consumers. Hawking leads to disorganisation in the dairy industry especially by encroaching on the catchments of the dairy cooperatives and other farmer groups. This weakens the dairy groups reducing their value and service to members," Ms Kagema said.
The farmers resolved to unite and promote establishment of a national umbrella body to represent and advance their interests.
They also called on the government to develop a policy on streamlining of milk marketing for implementation at national and county governments.