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Cabinet approves import of tax-free animal feeds to reduce farmer costs

The cabinet has approved the importation of zero-rated animal feed-making products into Kenya in an effort to reduce the cost of feeds for farmers.

The measure which was approved during President William Ruto’s cabinet sitting on Tuesday in Sagana, Nyeri, will see products used by feed makers such as yellow maize, soya bean, and oil cakes get into the country VAT and duty-free.

“We want to ensure that livestock feeds gets to farmers at a cheaper and manageable price,” said the president. He asked the agriculture ministry to monitor that the benefits of these tax exemptions don’t go to the manufacturers of animal feeds but to the farmers. 

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Between August 2020 to August 2023, the price of a bag of dairy meal (50kg) increased from Sh1,780 to Sh2,838.

During that time, the price of a 50-kilogram bag of Layers Complete Meal has increased by Sh900 to 3,400 KSh. 

Feeds constitute 60-70 per cent of the total cost of animal production, and while local feed makers had previously been able to produce 45-50 per cent of Kenya’s domestic demand this has been greatly hampered by gloabl supply chain demands caused by the Russia-Ukraine war and the global COVID-19 pandemic as well as the country experiencing its worst drought in 40 years.

According to feed makers, the high cost of feeds is not only pegged to a shortage of raw materials on the international market but also the cost of the dollar which has nearly doubled over the past four years. This has inflated the cost of imported goods to historic levels.

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“This initiative will allow us to stabilise feed prices so they don’t rise any higher. The price of feeds would have been lower barring the current dollar exchange rate which stands at Sh147. Once the price of the dollar stabilises or depreciates, we can in turn lower the price of our feeds,” explained John Gathogo, Chief Executive Officer at Empire Feeds.

The president also highlighted last week’s government directive to reduce the cost of subsidised fertiliser by Sh1,000 to Sh2,500 as having a significant bearing on livestock production.

“Dairy farmers will now be able to more cheaply fertilise their fodder which will enable them to grow more feed at a cheaper cost and increase their milk output,” he said.

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