NAIROBI, Kenya — Agriculture Cabinet Secretary Mutahi Kagwe is pushing for sweeping tax reforms aimed at lowering the cost of farming and agro-processing, saying the current regime is stifling competitiveness in Kenya’s agriculture sector.
Appearing before the National Assembly’s Agriculture Committee on Tuesday, Kagwe called on lawmakers to zero-rate value-added tax (VAT) on all agricultural inputs and commodities used in processing, arguing this would make Kenyan products more competitive both locally and internationally.
“All agricultural pesticides and fertilisers should be reverted to zero-rating as opposed to tax exemption, and all direct agricultural inputs like seeds currently taxed at 16 per cent should also be put under zero-rating,” said Kagwe.
The CS proposed that VAT be scrapped on agricultural machinery and packaging materials used in processing.
He also recommended that tea be reclassified as a food product to qualify for zero-rating, a move he said would boost domestic consumption and attract more investment in value addition.
Kagwe wants tea imports for re-export exempted from annual product conformity certification by the Kenya Bureau of Standards (KEBS).
He also called for reforms in the tea industry, including the merger of buyer and packer registration categories and a hike in import duty on packed tea from 25 per cent to 50 per cent—or alternatively, the introduction of an import levy.
Funding Shortfalls Undermining Agricultural Goals
Despite agriculture being a key driver of Kenya’s economy, Kagwe warned that underfunding is threatening the ministry’s ability to deliver on its mandate.
Of the Sh58 billion allocated to the Agriculture Ministry in the 2025/26 budget, Sh22.3 billion is for recurrent expenditure and Sh35.85 billion for development.
However, departments across the ministry face major shortfalls: the livestock department requires Sh6.7 billion but received Sh5 billion, while the agriculture department needs Sh20.7 billion but was allocated just Sh17.3 billion.
He also flagged a Sh37 billion deficit in development funding, which he said could compromise critical programmes.
Kagwe appealed for an additional Sh2 billion to strengthen the country’s strategic food reserves amid growing concerns over food security.
Sector Priorities: Mechanisation, Livestock, and Reforms
Outlining his ministry’s strategic priorities, the CS said improving agricultural efficiency through mechanisation, better post-harvest handling, and rural road expansion were top on the agenda.
He also pledged renewed focus on the struggling sugar and tea sectors.
In livestock, Kagwe pointed to the rollout of the Animal Traceability System (ANITRAC) and enhanced data collection to guide investment decisions.
He said the government would support the leather industry by encouraging more private sector investment.
Additionally, Kagwe said the ministry is working to fast-track key policy reforms, including the enactment of the long-awaited Livestock Bill and other supporting legislation to modernise the sector.
