By Rawlings Otieno

Livestock Development Minister Mohamed Kuti wants valued added tax (VAT) kept out of milk and dairy products.

Kuti said VAT could cripple the sector, which is now flourishing and discourage thousands of farmers from raising and breeding cows for quality milk production.

“If the Bill on VAT is passed, then we are likely to undermine this sub-sector. Milk and its products should be VAT-free,” said Kuti.

Speaking during the official launch of the new Kenya Dairy Board (KDB), the minister noted that the sub-sector has continued to be key to the livelihoods of the people and the economy.

Kuti said that the dairy industry had continued to be a key to the livelihoods of the people, citing that the industry was a source of income to over a million smallholder farmers who engage in dairy production.

Value chain

The output from the dairy farmers, is currently estimated to be five billion litres of milk per year, and supports other activities across the dairy value chain, such as milk bulking and cooling, milk processing and distribution inputs and service provision.

 At the same time the minister also directed Kenya Animal Genetic Resource Centre to double its efforts in the production of semen and embryos of better breeds of cattle to increase the production of milk for local and international consumption.

Already, dairy farmers export more than two million litres of milk to the neighbouring countries and to the Middle East.

Kuti said that dairy products exported to the East African community member States have increased following the operationalisation of the common market protocol, which has facilitated free movement of goods, capital, and people.

Comesa states

Dr Kuti further disclosed that more Kenya dairy produce will be exported to the nine member Comesa States, with a population of 389 million people, which form the largest trading block on the continent and asked farmers to produce more milk with the best breed of cattle.

The minister asked Kenya Revenue Authority (KRA) to allow more Kenyans invest in the sub-sector who will be taxable for a long period of time instead of imposing the 16 per cent VAT and kill the sector.

“I want to urge KRA not to impose this tax and allow more Kenyans to be taxable for a long period of time. If this law is passed majority of farmers will not sustain the production milk,” added Kuti.