Edible oil manufacturers have faulted a move to reduce tariff on finished oils coming from outside East Africa from 35 per cent to 25 per cent, saying it will create an unlevel playing field for businesses that have invested heavily in the sector.
Kenya Association of Manufacturers (KAM) edible oils sub-sector says the tariff should have been retained at 35 per cent, as opposed to the new rate set by the East African Community’s (EAC) Common External Tariff (CET), which is low by 10 percentage points.
“We thank the government for continuing the stay of application of the tariff on ready-made refined imported oils from outside EAC and Comesa at 25 per cent or USD500/MT whichever is higher in the EAC CET. The ideal would have been to retain this at 35 per cent as this is under the category of finished goods,” the sub-sector stated yesterday.
Lowering of the tariff comes barely weeks after the Ministry of Trade and Industrialization wrote to Treasury asking for the rate to be lowered to 10 per cent.
But the manufacturers argue that they have invested over Sh100 billion across the edible oils value chain and employ at least 10,000 people directly and thus deserve protection from cheap imports of finished products.
“We reiterate our commitment to supporting government efforts in job creation and economic stability while helping to address the needs of the vulnerable and food insecure populations in the country. This, however, has to start with the government creating a level playing field in the interest of all stakeholders and the general public,” they said.
They have also called on the national and county governments to allocate industry players land to grow oil palm in the country, saying the move would enable the private sector harness investments through public private partnerships with priority given to infrastructure and job creation.
The sub-sector argues that the two per cent Nut and Oil Crops Development Levy they pay should be utilised to develop palm, soya and sunflower farming.
“Through the Agriculture for Industry (A4I) initiative of KAM, the industry shall work with both the national and county governments in identifying suitable zones where sunflower and palm fruit will be grown,” they said, even while observing that it would take up to eight years before the first fruit crop harvests.
The sub-sector has 13 companies, three of which were established in the past five years, with a combined processing capacity of 7,160 metric tonnes per day.