The Kenya Flower Council (KFC) warns that the new agriculture Cess could stifle the flower industry.
KFC says that the government requires exporters of fresh produce to pay at least four times the Agricultural Produce Cess from January 1 2021. Such follows the passing of the Horticultural Crops Regulations 2019 which kicked in on January 1, 2020. According to the Flower Council, exporters will now pay at least for times the Cess, as the regulation charges 0.35% of customs value instead of the previous levy of 30% per kilo.
Clement Tulezi, CEO at KFC, says KFC objects to the move, saying that the policy was undertaken without consulting industry players, giving exporters a day to comply.
“We would like you to note that despite our continued engagement on the Horticulture (Crops) Regulations throughout 2019, there has been no official communication by neither the Ministry of Agriculture, Agriculture and Food Authority nor the Horticultural Crops Directorate on the Final Outcome of the bill,” says Tulezi. “This arbitrary increase will definitely kill the industry that is struggling to recover from the impact of COVID-19 Pandemic.
Further, KFC laments that the new regulation will also require exporters to pay Cess upfront on pre-payment accounts instead of payment on areas after export. This, according to Tulezi, is costly for exporters.
“The demand for pre-payment of the CESS on f.o.b [free on board value] is costly and will be cumbersome to administer.”
KFC proposes the halting of the regulations and further consultations on the matter.
Kenya’s flower industry employs directly employs 200,000 people. The flower industry is still recovering from the pandemic blows after COVID-19 locked the subsector from key markets in Europe.
SEE ALSO: Fruits, Veg & Flower Exports Hit KSh126 Billion between Jan & October
