Lobbies oppose draft rules on food, horticulture crops

Lobbies in the agriculture sector have opposed draft crops regulations, terming them anti-business.

Agriculture and Food Authority (AFA) in May published two draft regulations — the Crops (Food Crops) Regulations 2019 and the Crops (Horticulture Crops) Regulations 2019 — that are awaiting submission to Parliament.

But several organisations now say the rules will have crippling effects on players in the food sector, including food processors, grower associations, marketing agents, collection centre owners, warehouse owners, food depot owners as well as importers and exporters.

NIGHTMARE

In a joint statement under the umbrella of Business Membership Associations, Kenya Association of Manufacturers (KAM), Eastern Africa Grain Council (EAGC) and the Kenya Flower Council (KFC) warned that if the regulations become law, the cost of doing business would be prohibitive and that the logistics of fulfilling the requirements would be a nightmare.

Others who signed the position paper are Cereal Millers Association, Agro Chemical Association of Kenya, Cereal Growers Association and Fresh Produce Consortium of Kenya. The lobbies took issue with double taxation, which they said would occur since the proposed movement tax will be in addition to existing similar taxes.

Movement tax already in place include cess imposed by county governments, branding taxes, outdoor advertising tax, distribution tax, offloading tax and landing tax.

“Movement tax in the country is increasing at an alarming rate and is proving to be a cost burden to businesses within the agriculture sector,” they said in a statement signed by KAM’s Phyllis Wakiaga.

MARKET ACCESS

They said the regulations would hinder market access because of the delays of getting the licences given the multiplicity of the clearances that business have to meet.

“This will hinder smooth businesses operations, discourage investment in the agriculture and transport sectors, and render businesses uncompetitive regionally and internationally.”

They said the rules would also run counter to Article 209 (5) of the Constitution, which mandates the government to ensure that the taxation and other revenue-raising powers of a county shall not be exercised in a way that prejudices economic activities.

They said the proposed registration fees, licenses and certification fees would increase taxation.

The lobbies also faulted the regulations for concentrating on the collection of fees without apportioning funds towards supporting business.

They also took issue with the bid to control prices of food crops such as maize. In proposing price controls, AFA aimed at protecting consumers from exaggerated prices by traders as commonly witnessed in maize. However, the associations say the new rules go against the principle of supply and demand.

LEGUMES

Food crops targeted include wheat, barley, finger millet, pearl millet, wheat, oats, rye, triticale (a crossbreed of wheat and rye) and amaranth.

The regulations also target legumes such as soya beans, pigeon peas, cow peas, chicken peas, broad beans, duster beans, dolichos (njahi), sweet potatoes, cassava and other tubers. The proposed law — which governs food production, processing, marketing, imports and exports — also prohibits the exportation of raw coffee.

The tough regulations also propose the appointment of food inspectors to ensure that crops and products conform to local and international standards. Farmers will also be required to maintain records of pest control products and other substances used in the production or storage of food crops.

Crop inspectors can demand to see these records. Those found to have exceeded the maximum residue limit will be suspended from crop production until corrective measures are taken.

Businesses, however, point out that such regulations are already within the mandate of agencies such as Kenya Plant Health Inspectorate Services, Kenya Bureau of Standards, Horticulture Crops Development Authority and Pest Control and Products Board.

They wonder why with the increasing use of technology in information sharing, the administrative burden to register and be licensed by multiple government agencies cannot be reduced, instead of being added.

DELAYS

They say the regulations require businesses to engage the AFA and county governments on a similar issue and call on the government to clearly demarcate the functions of both the national and the regional governments in the regulation of the food sector.

The business sector is currently reeling under high cost of trade arising from regulatory delays such as in issuing licences, permits and certification, with the ease of doing business index placing Kenya at position 61 in the world.

The lobbies are also wary that absence of an effective regulatory system leads to increased likelihood of corruption and extortion.

The most affected by the regulations will be businesses engaging in perishables as “no provisions have been put in place to ensure strict timelines between the government agencies to ensure there are prompt actions and no delays.”

Additional importation requirements have been introduced in the regulations, which the lobbies warn will affect trade at the port.

They want the ministry to convene a meeting with the Council of Governors to agree on their regulatory roles.

HARASSMENT

They have also called for a meeting with the ministries of trade and health, and other agencies whose roles are duplicated in the proposals in a bid to address the overlaps.

“The regulatory agencies have been bestowed with administrative powers such as revoking or rejection of applications. However, no clear grounds or criteria have been provided for such action,” the statement says, adding the lack of clarity on this will promote harassment and corruption.

They now want the ministry of agriculture to convene a meeting between them and the Council of Governors to agree on their regulatory roles.

They have also called for a meeting with the ministries of trade and health, and other agencies whose roles are duplicated in the proposals in a bid to address the overlaps.

They also want an assessment to establish the cost of movement tax, registration fees, licenses and certification fees to businesses in the country — especially SMEs — and the transport businesses before imposition of the taxes.

They further want the capacity of the AFA and county governments to provide the functions outlined under the Regulations examined.

Additional reporting by Leopold Obi.