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July 08, 2008

Kenya to introduce inputs subsidies

The Kenyan government plans to introduce subsidies for farmers in the form of a fund that will significantly reduce the cost of inputs such as fertiliser and seeds.

And a paper will be presented to the Cabinet followed by a Bill in Parliament to establish the Agricultural Development Fund, minister William Ruto said on July 8.

“We have agreed with the Ministry of Finance on the need to create a new instrument to finance the agricultural sector. We need to support our farmers to purchase fertiliser in partnership with the Government,” said the Agriculture minister.

Under the fund, farmers will pay 60 per cent of the cost of the inputs with the Government footing the remainder. All farmers will benefit from the fund.

Speaking during the ground-breaking ceremony for the Tea Board of Kenya headquarters, Mr Ruto said the fund would amount to 4.5 per cent of the annual Government budget.

“Agriculture accounts for 45 per cent of all revenue collected by the Kenya Revenue Authority. We are only asking for 10 per cent of that money. KRA can collect more from a sector that is better financed,” he added.

Farmers in Rift Valley have been up in arms in recent times over the escalating cost of fertiliser. Tea farmers in Murang’a and Nyeri are also said to be uprooting the crop because of what they term as low prices against high input costs.

Kenyan tea is sold at the Mombasa tea auction. The buyers blend it with tea from other countries.

Mr Ruto said he would be happy to see the Kenya Tea Development Agency, which sells the tea on behalf of the farmers, revert back to its status as a parastatal. It was incorporated as a private company in June 2000.

Agriculture assistant minister Japhet Kareke and MPs from tea growing areas recently said the agency was eating into farmers’ dwindling returns and was hugely responsible for the problems facing farmers.

The Nation

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