Horticulture farmers cry foul over delayed Sh12 billion VAT refunds

A worker sorts flowers at the Maridadi flower farm in Naivasha. [Antony Gitonga, Standard]

The Agricultural Employers Association (AEA) has warned that the agriculture sector is on the verge of collapse to failure by the government to pay more than Sh12 billion Value Added Tax (VAT) refunds owed to farmers.

The situation has been worsened by ongoing rains that have wiped out produce worth millions of shillings amid plans by the Government to increase some taxes in the Finance Bill 2024.

AEA Chief Executive Officer Wesley Siele said some farmers have been forced to scale down production due to the financial crisis and increased costs.

He said that the VAT refund could come in handy noting that the last time the government paid the farmers was in 2020 at the height of Covid-19.

"The government owes farmers over Sh12 billion in VAT refunds and this can be used to expand the sector and create more job opportunities," he said.

Speaking during the association's 61st AGM at Sawela Lodge in Naivasha, Siele regretted that the ongoing rains have caused massive destruction raising fears of food security.

He called on the government to come up with a fund to cushion farmers who lost produce due to heavy rains after investing heavily in fertiliser, seeds and manpower.

"We are calling for a voice of reason in plans to increase the minimum wage bill as currently many farmers are facing harsh economic times," he said.

The association chairman Kirimi Mpungu said that they had a problem with some sections of the Finance Bill which seek to introduce new taxes that will further burden farmers.

Mpungu noted that despite agriculture being one of the economic drivers of the country the livestock sector had been forgotten despite its high potential.

Outgoing AEA chairman Stephen Strong decried the new taxes being introduced by the government against a rise in the cost of production.

"Currently the biggest challenge facing the agricultural sector is high cost of production and new taxes targeting small scale farmers and this could kill farming," he said.

Justice Fred Ochieng who was the key speaker during the meeting rooted for Alternative Dispute Resolution (ADR) mechanism in resolving cases involving employers and workers.

"We have come to learn that this mechanism is very effective in resolving disputes mainly in the agriculture sector where we have disputes around wages and working conditions," he said.