The Kenya Flower Council has protested the government’s unilateral decision to alter the mechanisms of paying Cess, terming them punitive and injurious to the sector, still struggling to recover from COVID-19 restrictions which nipped demand for cut flowers.
A letter sent on 30th December 2020 by the Horticultural Crops Directorate (HCD) to the industry directs all exporters of horticultural products to pay from 1st January 2021 Agricultural Produce Cess based on the free on board (f.o.b) value and not the quantity in line with the new Horticulture (Crops) Regulations.
According to the Council, the cut-flower industry learned about the passing of Horticulture (Crops) Regulations, which were gazetted in June 2020. The regulations increased the Agricultural Produce Cess levy from the previous 30 cents per kilo to 0.25 percent of the customs value. This translates to at least four times what exporters have been paying until December 2020.
Further, the letter directs exporters to make payments of CESS upfront on pre-payment accounts. Exporters are therefore advised to put an advance payment for the levies in order to avoid being inconvenienced.
Previously, payment of CESS has been done in arrears after export.
Clement Tulezi, CEO of the Kenya Flower Council said they object this arbitrary move by the government. “The passing and implementation of the Horticulture (Crops) Regulations is being undertaken without proper consultation with the industry players. Additionally, exporters were given one day to comply.”
He added “we would like you to note that despite our continued engagement on the Horticulture (Crops) Regulations throughout 2019, there has been no official communication by neither the Ministry of Agriculture, Agriculture and Food Authority nor the Horticultural Crops Directorate on the final outcome of the bill. This arbitrary increase will definitely kill the industry that is still struggling to recover from the impact of COVID-19 pandemic.”
The statement added that the sub-sector employs over 200,000 Kenya’s directly and a further 1,000,000, thus impacting over 4 million livelihoods. These livelihoods are at risk if these regulations are implemented as directed by the Horticultural Crops Directorate.
“We believe there is no justification for the increase of Agricultural Produce Cess. There is no sign of added value or service from the Horticultural Crops Directorate to exporters that warrants the increase”, Tulezi added.
The flower export industry ranks among the top four foreign exchange-earners for Kenya.
They proposed that the implementation of the regulations be halted to allow for proper consultation with the stakeholders to discuss the issue and find a way forward.