Business

State told to zero-rate VAT on agricultural implements to improve food production

Thursday, February 22nd, 2024 05:48 | By
A tractor ploughing a farm. PHOTO/Print
A tractor ploughing a farm. PHOTO/Print

The national government has been urged to zero rate Value Added Tax (VAT) on agricultural machinery and implements to boost productivity and contribute to achieving food security in the country.

Farm implements refer to a variety of tools, equipment, and machinery used in agricultural activities to facilitate cultivation, planting, harvesting, and other farming operations.


Simba Corporation Group CEO Dinesh Kotecha said zero-rating VAT on farm implements will encourage mechanization by reducing the cost of acquisition of the various additional implements a farmer would need for a complete end-to-end solution in land preparation and management.


“Every farm would need a tractor to improve productivity. Any financial incentives extended to farmers towards mechanisation would be a boon to the economy through job creation as well as other multiplier effects that would accrue in the various crop value chains,” he said during the launch of Mahindra Tractors in Kenya.


Simba Corp Executive chairman, Adil Popat said while the normal international ratio of tractors per 100 square kilometres is 10 per cent, Kenya’s ratio stands at a mere 0.2 per cent.


This pales widely in comparison to the recommended global average of 25 per cent accessibility to farmers.


This need, he added, is even more poignant when you consider that Kenya’s average land mass set aside for agriculture stands at 28 million hectares or 48 per cent of land area which means there exists a big opportunity to help farmers improve efficiencies in land management “We must therefore encourage agricultural efficiencies by making it easier and affordable for smallholder farmers to acquire farm equipment for enhanced productivity towards achieving food sufficiency in the country,” said Popat. He said food production, post-harvest losses, and many other challenges remain a key hindrance to Africa’s achievement of food sufficiency.


A big chunk of this is due to the inaccessibility of farm equipment and implements to support smallholder and medium-sized farmers.

While making his keynote address, Paul Rono, Principal Secretary, State Department of Crop Development and Agricultural Research, commended Simba Corporation and Mahindra for the partnership which he said was an indicator of the private sector’s confidence in the local economy, and in particular agricultural development opportunities in the country.


“I am happy to note that Mahindra tractors, renowned for their cutting-edge technology, robust design, and fuel-efficient engines, is keen on supporting and empowering Kenyan farmers, both large and small,” Rono stated. This, he added, will go a longway in supporting government efforts to put more land into productive use, build a robust and efficient agricultural sector, while also improving farmer livelihoods and contributing to economic growth.

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