- Treasury CS Njuguna Ndung’u said animal feed manufacturers have a one-year window to import duty-free raw materials under the EAC Duty Remission Scheme.
- Timothy Njagi, a senior researcher at Tegemeo Institute of Agricultural Policy and Development, said prices of animal feeds have been increasing since 2019.
Image: FILE
Kenya will now be importing inputs for the manufacture of animal feeds duty-free under the East African Community for one year.
While presenting the 2023-2024 budget at the National Assembly on Thursday, Treasury CS Njuguna Ndung’u said animal feed manufacturers have a one-year window to import duty-free raw materials under the EAC Duty Remission Scheme.
The move is aimed at reducing the cost of animal feeds to farmers.
Ndung’u said the high cost of inputs of animal feeds coupled with other factors like unfavourable weather conditions make locally manufactured animal feeds expensive.
“This contributes to food inflation. In order to promote the local manufacturing and make animal feeds affordable to farmers, Kenyans will import inputs for manufacture of animal feed duty-free under the EAC Duty Remission Scheme for one year,” he said.
Timothy Njagi, a senior researcher at Tegemeo Institute of Agricultural Policy and Development, said prices of animal feeds have been increasing since 2019. This is mainly driven by rising costs of raw materials, especially imported ones.
“Kenya cannot access cheaper raw materials from global markets due to restrictions on the importation of GM products. Uncompetitive feed prices have hurt farmers and animal feed manufacturers due to competition from imports,” he said.
Njagi noted that the government has responded by allowing an import duty waiver for imported raw materials. However, this intervention is unlikely to lead to the long-term competitiveness of animal feed manufacturing or the livestock value chains.
He said the costs of animal feeds have been rising due to a shortage of raw materials such as soya, and oil cakes seeing the most significant price increases.
According to the Association of Kenya Feed Manufacturers, the price of soya and oil cakes increased by more than 60 per cent in 2021.
“The immediate impact of the rising feed prices has been losses by farmers amidst sticky output prices. As a result, farmers are cutting back production, and as a consequence, animal feed manufacturers are also being adversely affected. There are also reports of farmers abandoning livestock enterprises such as poultry,” says AFEFEMA.
The association has also reported folding of small-scale feed manufacturers amid rising costs and increasing losses leading to massive job losses. Furthermore, animal feed wholesalers and retailers are increasingly importing animal feeds from neighbouring countries to maintain demand from livestock farmers.
Data from AKEFEMA further indicates that cost of raw materials accounts for the largest cost component in feed manufacture going at Sh26,268 per ton or Sh1,839 per 70kg bag.
Maize germ accounts for 40 percent of the cost of raw materials, rice polish at 29 percent, energy or electricity accounts for 69 percent of the cost of raw materials. Oil cakes account for 26 per cent.
Njagi said the country utilises 12.5 per cent of the total maize demand on animal feeds, according to data form the Ministry of Agriculture.
“Due to competition with other uses, mainly a significant staple food commodity, Kenya must rely on imports to meet her total maize demand. Maize is usually imported from Uganda and Tanzania,” he said.
Other raw materials used for animal feed production, such as wheat, rice, oil cakes are vitamins, are primarily imported. Maize germ, wheat grain, wheat pollard, rice bran, rice polish and millet are mainly sourced from Uganda.
Soya bean, Soya meal, and groundnut cake are primarily sourced from Tanzania. Sunflower meal, cotton meal, and omena are sourced from Uganda and Tanzania.
Vitamins, mineral premixes, and amino acids are mainly imported from Asia and South Africa, with China being a key source country in Asia.
Njagi said in order to bring down prices of animal feeds, the government should consider the animal feeds sub-sector's long-term competitiveness.
“This includes reviewing options such as importing semi-processed GM products, enhancing access to cheaper sources of raw materials by addressing incoherent policies. Investing in research and development in alternative sources of more inexpensive raw materials such as insects and their utilisation in the manufacture of animal feeds,” he said.