Gathoni Wamuchomba, the Member of Parliament for Githunguri, has expressed significant apprehensions about the Finance Bill 2024 and its negative impact on the poultry farming industry in Kenya. During a media interview, Wamuchomba stressed that if the bill is approved, East African Community (EAC) countries could export eggs and other poultry products to Kenya without incurring any tariffs. The duty-free policy presents a major challenge for the local poultry industry as neighboring countries such as Tanzania have a significant cost advantage in poultry production compared to Kenya. This puts Kenyan poultry farmers at a disadvantage.
Wamuchomba stated that countries like Tanzania with lower production costs would increase affordable poultry products imported into the Kenyan market. This scenario would lead to intense competition, posing a challenge for local farmers to maintain their competitive edge. Consequently, numerous poultry farmers in Kenya may be compelled to close down their operations. She observed that the intense competition is already leading some of the key stakeholders in the Kenyan poultry industry, including influential individuals within the government and presidency, to move their operations to countries such as Tanzania and Uganda, where the business environment is more conducive.
The Member of Parliament also emphasized that the problem is made worse by the Strategic Trade and Investment Partnership (STIP) agreements between specific East African Community countries and the United States. These agreements permit the United States to export processed poultry products to East African Community countries without having to pay duties. As a result, these countries within the EAC can re-sell these poultry products from the US to Kenya without having to pay taxes within the EAC. This essentially establishes a way for US poultry products to enter the Kenyan market, which undermines local production.
Wamuchomba expressed her worry that countries not belonging to the EAC are also exploiting these trade relationships for their own benefit, despite not being part of the agreement. These nations, which have agreed to STIP arrangements, authorize the importation of completed poultry items from the US, thus receiving the advantages of duty-free exports within the EAC framework. This scenario paves the way for a considerable increase in the importation of foreign poultry products into Kenya, circumventing the local production and market conditions.
Wamuchomba brought up a crucial issue about the quality of poultry products being imported and sold in the Kenyan market. According to the STIP agreements, the US has permission to export less popular parts of chicken, like heads and feet, which are not widely consumed within the country. Because of favorable tax exemptions, large quantities of these parts, which are in low demand in the US, are being exported to Kenya. This behaviour not only causes a disturbance in the local market but also impacts the prices and demand for poultry products that are produced locally.
Wamuchomba cautioned that the Kenyan poultry industry could suffer severe consequences from the compounded impact of these trade policies and agreements. The increase in low-cost foreign poultry imports, supported by advantageous trade agreements and tax exemptions, poses a significant threat to domestic producers. She emphasized that the current situation might cause some poultry businesses in Kenya to fail, leading to substantial financial losses and adversely affecting the livelihoods of numerous farmers and workers in the poultry industry.
In summary, Wamuchomba’s worries emphasize the necessity of thoroughly thinking about the consequences of the Finance Bill 2024. The Kenyan poultry industry faces a significant threat to its sustainability due to the potential increase in competition from foreign poultry products, which is made easier by duty-free provisions and strategic trade agreements. Decision-makers need to carefully consider these factors in order to safeguard the interests of local farmers and ensure the sustainable future of the agricultural sector.
