Poultry keepers hit hard by new move on VAT

A poultry breeder feeds chicks at her Nyamasaria residence in Kisumu County. FILE 

By GERALD ANDAE,

In Summary

• Orders for one-day chicks cancelled as farmers balk at the 16 per cent tax imposed on poultry feeds.

Tough times lie ahead for livestock farmers as the impact of VAT Act 2013 takes its toll on businesses.

Poultry breeders said they had been hit by cancellation of orders for a day-old chicks as farmers balk at the 16 per cent tax imposed on poultry feeds. This has seen the price of feeds rise by Sh400 for a 50-kilogramme bag.

“When the price of chick marsh went up many farmers who had placed orders for chicks had to cancel them, subjecting breeders to losses,” Kenya Poultry Association chairperson Wairimu Kariuki said.

Ms Kariuki said that the overgrown chicks were still in hatcheries. Robert Muchugia of Sigma Supplies said orders had shrunk significantly.

“Any farmer who came for booking before VAT took effect (September 2), would get chicks in November. With the enforcement of VAT, things have changed suddenly,” Mr Muchugia said.

Sigma supplies, which also makes poultry feeds, has increased the price of a 50 kilogramme bag of layers’ mash from Sh3,000 to Sh3,450.

Ms Wairimu said that unlike cows which can feed on grass and other vegetation, exotic chicken need commercial feeds.

“Exotic breeds are heavy feeders and with the current cost of the feeds many farmers cannot sustain them,” she said.

Ms Wairimu said the industry could collapse as traders import cheap poultry products from neighbouring countries such as Uganda.

She put the cost of producing a tray of eggs at Sh359 against the prevailing price of Sh280, meaning farmers are incurring losses.

Ms Wairimu said the price of a 50 kilogramme bag of starter marsh is Sh2,900, up from Sh3,300. Medicine meant for chicken are also subject to VAT.

Dairy farmers have also not been spared with raw milk not subject to VAT while animal feeds are vatable.

“Farmers cannot charge VAT on raw milk since it is not stipulated in the new Act, meaning they will sell their milk at the same old price even with the increased cost of production,” said New KCC managing director Kipkirui Langat.

Dairy Producers Association vice national chairman Peter Lelei asked the government to review VAT on animal feeds.