June 9, 2005

Kenya's dairy industry expecting government tax reforms
 

Major companies in Kenya's dairy industry are expecting the government to carry out tax reforms on milk and dairy products to increase local sales volumes.

A zero-rating on value-added tax would allow affordable milk products to many consumers in the face of soaring inflation and encourage community consumption, according to Spin Knit Dairy, a key industry player.

SKD estimated that nearly 80 per cent of all Kenyan milk is sold unprocessed, highlighting the need for domestic consumers to have easy access to safe processed milk. Taxes on milk and dairy products reportedly discourage milk processing and thus limit safe, nutritious milk supplies.

SKD also pointed out that tax-free milk imports have a negative impact for domestic milk processors, particularly due to unfair pricing. The flood of imports would destabilise the market as a result.

The dairy sector has seen recovery since 2004, with milk deliveries in the formal industry increasing by 40 percent last year, from 163,228 million litres delivered in the same period in the previous year.