The levying of Agriculture Produce Cess (APC) is one the most significant barrier to trade for agricultural producers across the country. A study conducted by Dr Daniel K. Karugu in 2017 revealed that multiple and high agricultural cess rates were being charged arbitrarily and with no justification for the rates applied across different counties.
Even though the payment of APC is reported to have been paid mostly by commodity traders, the burden is still cast on farmers as the traders discount the cess charges on the final farmgate price. This practice ends up reducing producer incomes and is a threat to the sustainability of agricultural productivity in Kenya.
The national public policy on APC remains unclear and there is, therefore, a vacuum in policy guidelines for the collection and utilization of APC even at the counties level.
The study, which was conducted in eight (8) selected counties of Kenya focused on the commodity value chains of maize, tea, cut-flowers, wheat, potatoes, coffee, dairy and other livestock.
Recommendations have been made for the county and national government to reform agricultural taxation and levies in order to lift the burden on value chain players and contribute to making agriculture more competitive and sustainable.
Cereal Growers Association (CGA) with the support of Business Advocacy Fund (BAF) has undertaken a lobbying process for the reform or the total abolition of APC. This will help ensure that movement of farm produce from the farm to markets will be freed up by eliminating the time spent and costs incurred. Overall, the removal of APC will incentivize agriculture producers to be more competitive in the regional markets.