•The market cess on cereal millers in Nairobi is being collected by KRA officers stationed outside the millers’ premises, on behalf of the county government.
•This adds pressure to consumers who are already feeling the impact of global factors that have seen the prices of oil, fertiliser, wheat, maize and cooking oil increase.
Image: FILE
Expect the prices of all types of flour and an assortment of cereals to go up, as producers and millers pass extra taxes imposed on them to consumers.
Kenya Revenue Authority (KRA) and the Nairobi City County government have moved in to collect cess on cereals from produces delivered to millers for processing and packaging.
The market cess on cereal millers in Nairobi is being collected by KRA officers stationed outside the millers’ premises, on behalf of the county government.
It took effect on March 1.
According to KRA, it engaged in December last year before implementing the levy.
“The responsibility for paying for the cess shall be on the owner of the products and not the miller unless the miller is the owner,” KRA deputy commissioner-county revenue division, Annastaciah Githuba says in a letter to the Cereal Millers Association (CMA).
The association has however said the move will “adversely” affect farmers, millers and ultimately impact consumers who are already battling high input and food costs.
“CMA is concerned with the introduction of ‘Market Cess’ by KRA on behalf of the Nairobi City Council, that will be detrimental as it will increase the cost of doing business in Nairobi,” the association’s chief executive Paloma Fernandes told the Star.
According to CMA, an agricultural cess is already a form of tax that is levied by county governments, on the movement of agricultural produce from the source county as well as in transit within the county.
The idea behind paying cess was to ensure that the county of origin, which was supplying the produce, collected revenue to improve and maintain its infrastructure and services towards the agricultural sector, she notes.
“Therefore the introduction of ‘Market Cess’ also at the county of delivery of the produce will in effect introduce double taxation on the same essential food items, ” said Fernandes.
Farm produces being taxed at delivery points include maize, wheat, rice, sorghum, millet, oats and barley.
CMA represents more than 35 large grain milling companies in Kenya, who account for about 40 per cent of total grain milling capacity for maize and over 80 per cent of the wheat milling capacity.
It reaches over 10 million consumers of maize flour and over 30 million consumers of wheat flour.
Its members operate mills in Mombasa, Machakos, Mwingi, Kitui, Nairobi, Thika, Nakuru, Uasin Gishu, Kitale, Kisumu, amongst others.
The passing of the costs adds pressure to consumers who are already grappling with a high cost of living, as the impact of the Russia-Ukraine war continues to be felt in the country.
Prices of fertilizer, a key input in farming, are on the rise, which affects the cost of production.
For instance last week, global DAP fertiliser prices increased by 25 per cent with the impact expected to be felt in Kenya in the next one month. It is currently going for Sh5,600 per bag up from Sh2,500 a year a go.
The prices could go above Sh7,000 for a 50-kilo bag.
Wheat prices have shot up from $345 (about Sh39, 295) per tonne to $460 (Sh52,394 ) per tonne over the last one week.
Consequently, a 90 kg bag of wheat would cost approximately Sh5,650, with a two kilo packet projected to retail at between Sh180 and Sh200.
Depending on the availability of wheat, prices are projected to cross $500 (Sh56,950 )per tonne, which would translate to $550 (Sh62,645) per tonne landed in Nairobi.
A two-kilo packet of maize flour which was retailing at an average Sh90 in July last year has since gone up to Sh126 and above, depending on the brand.
Last week, the Kenya Association of Manufacturers says a 400gram loaf of bread could go up from Sh55 to between Sh60-67.
Cooking oil prices have tripled as manufacturers face a global shortage of sunflower, crude palm oil, and Soybean.
“CMA notes With the current war, between Russia and Ukraine, freight, fuel, fertiliser and ultimately food prices especially wheat prices are at unprecedented levels, this is probably the worst time to add any more costs to an environment where food prices are definitely expected to rise,” Fernandes said.