July 15, 2010

Kenya battles over wheat import duty

Kenya's government has not stopped in discussing the issue over the duty on imported wheat, with some saying that it favoured European producers and is unbeneficial to local growth.

Even at 10%, Kenya had one of the highest duties on wheat imports in the East African Community, Finance Minister and Deputy Prime Minister Uhuru Kenyatta explained. Tanzania also levied 10% while Uganda, Rwanda did not charge duty. But members did not buy the explanation and demanded an increase to discourage competition.

This has been raised for the second time after Kilgoris MP Gideon Konchella (PNU) questioned the minister's justification for reducing the duty in the 2010/2011 Budget from the previous 35%. Mr Konchella wanted to know if the minister planned to increase the duty for farmers to benefit from a bumper harvest, particularly in Narok South and North.

Wheat farmers held a demonstration on June 28 in which they blocked the Narok-Nairobi highway in protest over the duty. On Wednesday (July 14), the minister said Kenya's wheat output was still low to meet local demand. "We are not producing enough for Kenya and the region," he said, adding that farmers were only producing a third of national requirements.

He said no country had applied for the 35% rate since 2005 due to a shortage of wheat in the region, which was meant to give some level of protection to the local farmers. Mr Kenyatta said with the coming into effect of the EAC common market where goods were expected to move freely, it would be difficult to impose different rates of duty on any products imported into the region since they could find their way to other partner states.

Members complained that the 10% import duty encouraged European farmers to dump their wheat in the country. Ikolomani MP Boni Khalwale (New Ford Kenya) said decisions made at the EAC should not punish member states. Deputy Speaker Farah Maalim (ODM) said European farmers benefited more. "We cannot let farmers who are subsidised by their governments to come and dump their goods here," he said.