The Kenya Flower Council (KFC) has announced its objection against the move by the government to increase the Agricultural Produce Cess (tax) effective 1st January 2021.

As the representative body for growers, exporters and relevant cut-flower and ornamentals value chain actors, the council claims that the passing and implementation of the Horticulture (Crops) Regulations is being undertaken without proper consultation with the industry players.

According to Clement Tulezi, Chief Executive Officer KFC, exporters of fresh produce in the country are from 1st January 2021 paying at least four times the previous Agricultural Produce Cess.

Mr. Tulezi further claims that a letter sent on 30th December 2020 by the Horticultural Crops Directorate (HCD) to the industry, directs all exporters of horticultural products to pay from 1st January 2021 Agricultural Produce Cess based on the Free On Board (FOB) value, and not the quantity in line with the new Horticulture Regulations.

Previously, payment of cess has been done in arrears after export. The demand for pre-payment of cess on FOB is projected to be costly and cumbersome to administer for the exporters.

The council chief also added that 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. This, in return, he adds, will affect the current efforts by the sector to recover from the adverse effects of the COVID-19 pandemic.

As countries have in the last five months gradually lifted the lockdowns and eased restrictions, demand for cut-flowers has been picking up in most destinations. However, the move to increase the produce levy is expected to erode gains made by the sub-sector, which employs over 200,000 Kenyans directly and a further 1,000,000 indirectly, thus impacting over 4 million livelihoods. These livelihoods are at risk if these regulations are implemented as directed by the Horticultural Crops Directorate.

This directive is seen to be against the spirit of facilitating trade and creating a conducive business environment, considering that the flower export industry ranks among the top four foreign exchange earners for Kenya.

The Council’s proposition is that the implementation of these regulations be halted to allow for proper consultation with the stakeholders.