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.
HEALTH HAZARD
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.