July 22, 2010

 

Low import duty on wheat threatens Kenya's wheat producers

The possibility of the Kenyan government reversing a budget decision to reduce import duty on wheat appears shaky following the East African Community's decision.

 

During his 2010/2011 Budget, Kenya's Finance Minister Uhuru Kenyatta announced reduction of import duty on the grain from 35% to 10%. Wheat farmers have opposed the minister's decision, saying it would discourage production and make them unable to sell their harvest because of the availability of cheap imported produce.

 

On the other hand, millers have asked the government to implement the minister's decision arguing that despite years of protection, wheat producers have neither become efficient nor increased acreage under the crop.

 

As per East African Community, Kenya, Uganda and Tanzania should have started charging imported wheat grain 10% duty on July 1, 2010.

 

According to a notice published in East African Community Gazette, EAC Council of Ministers, the community's decision-making organ, approved the duty reduction on June 29, 2010.

 

The council said it exercised powers of EAC Customs Management Act, 2004.

 

It approved reduction of import duty on wheat from 35% to 10% for Kenya, Tanzania and Uganda for a period of one year. It also endorsed reduction of import duty on wheat grain from 35% to 0% for Rwanda for a period of one year.

 

"This notice shall come into effect on first day of July 2010," said the notice signed by Council of Ministers' chairman, Dr Diodorus Kamala, who is also Tanzania's East African Community minister.

 

The council's regulations, directives and decisions taken or given in pursuance of the provisions of EAC treaty are binding on partner states. The council, which meets twice each year, consists of ministers responsible for regional co-operation of each partner country.

 

Agriculture permanent secretary Romano Kiome recently said that although a Cabinet declaration led to the formation of a team comprising Agriculture, Trade and Finance ministries to re-look into the issue, the final decision lies with Finance ministry.

However, he agreed, the EAC common market protocol could impede quick decision.