Poultry farmers now want the Ministry of Trade to intervene on discriminative tariffs charged by the Ugandan government on chicken meat.
Uganda Revenue Authority has in the past two years charged, Kenyan Chicken meat export a 25 percent of taxes – 18 percent of VAT, 1 percent of Railway development levy and 6 percent Withholding Tax.
“We want the government to review the taxes charged by our neighbors, both Uganda and Tanzania. Our propose is to the government is to impose tax or Ugandan government to waive 19 percent tax on VAT and Railway Development Levy ,” argued Monica Wanjiru, the President of Federation of Kenya Poultry Farmers (FKPF).
The taxes charged by the Uganda, Ms Wanjiru argued, violates World Trade Organization 1st principles of Non-Discrimination of neighboring goods.
In a press statement, the FKPF quoted the law, which states that “Most-favoured-nation (MFN): treating other people equally Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.”
This means that the Uganda poultry products have a free access to the Kenyan market while the Kenyan products are hindered from access to Uganda through Non-Tariff Barriers (NTBs) or imposition of domestic taxes (VAT, withholding taxes or railway levies).
Wanjiru added that “Tanzania has also imposed stringent requirements for compliance from the Tanzania Bureau of Standards (TBS) which many players in the poultry sector have seen as deliberate efforts to bar them from accessing the market. Worth noting is the fact that Tanzania with effect from 2016 banned the importation of poultry and poultry products into the country.”
“We therefore cannot over emphasize the vulnerability of the Kenyan poultry industry from the regional attack. The most recent impact of such actions by Tanzania culminated in the 2018 burning of 6,400 chicks imported into Tanzania from Kenya for being deemed non-compliant to the local poultry guidelines at a great loss to the importer.”
In 2017 Kenya had banned the importation of poultry products into Kenya due to an outbreak of Avian Influenza Virus. Uganda retaliated by banning importation of Kenyan Poultry products into their country. Upon the resolution of the outbreak, the countries agreed to allow the resumption in the trade of poultry products.
The poultry industry is an important component of the livestock sub-sector,which accounts for about 10 percent of national GDP. Its contributes about 0.7% of national GDP, while at the same time it a major source of employment, with an estimated 3 million people deriving their livelihood and income from poultry farming, processing and related activities. It also employs veterinarians, researchers and extension officers.
In order to safeguard the industry gains, the poultry stakeholders are urging the government to close the boarders similar to other EAC countries. Both Uganda and Tanzania have closed their boarders, why has Kenya kept borders open for processed chicken?
In a joint meeting between Ministry of Agriculture and Ministry of Trade and Industry earlier in the year, Dr. Chris Kiptoo the then Principal Secretary in the Trade Department said that the taxes charged by Uganda were against the EAC Principal. “Uganda should not be charging chicken meat taxes because we don’t charge them. They can apply local taxes as withholding taxes, but not VAT and Railway Development Levy,” Dr Kiptoo told a meeting attended by Livestock stakeholders.
It is unclear, why Uganda is imposing railway development levy, whereas the cargo railway line to Uganda is yet to be operationalized.
Sources at the Ministry of Trade told us that they are planning a meeting with EAC ministry to review the tariff book on all EAC commodities. “We are planning a meeting with Ministry of EAC, to discuss the way taxes should be applied, because all the six member states produces similar goods,” said our sources who didn’t want to be quoted.
In a technical paper presented to Department of Livestock in December 2019, and developed jointly by Livestock stakeholders, it proved that Hudani Manji Holdings (Yokuku), the Ugandan poultry producer that has been exporting product to Kenya is effectively dumping products into the Kenyan market. “The price offered to majority of the customers here in Kenya is lower than Hudani’s direct costs (production, transport and inspection fees) and the prices generally offered to customers in Uganda,” the document read.
Dumping raises important issues for Kenya and its policy makers, from unemployment to food security, and has implications for economic and social stability. Kenyan producers would compete strongly against imported products from Uganda if competition was fair, but dumping has made it impossible to compete fairly in a growing local market that has seen the proliferation of price-sensitive retailers and customers.