Kenya decided to impose a 16 percent Value Added Tax (VAT) to milk products from Uganda.
According to Kenyan Authorities, the move is meant to shield the Kenyan farmer from cheap milk that has been flooding the Kenyan market from Uganda.
President Uhuru Kenya and strongman Yoweri Kaguta Museveni had agreed that Uganda supply milk to Kenya without being taxed.
The decision to impose 16 percent VAT on milk from Uganda was reached after what has been described as bilateral talks between officials from Kenya and Uganda.
The move also comes after farmers in Central parts of Kenya resolved to pouring out milk instead of selling it at a throwaway price.
Companies have been paying between 16 and 18 shillings for a liter of milk, down from the recommended price of 35 shillings.
Will the imposing of 16 percent VAT on milk from Uganda help cushion the Kenyan farmer? No. Truth is farmers will continue being exploited.
Truth is if the government of President Uhuru Kenyatta wanted to cushion farmers, he would have done that comfortably without letting farmers protest. Why? His family company, Brookside, is the largest milk buyer in the country.
Although, on paper New KCC was revived, there have been deliberate efforts to take it back to its grave to give private players like Brookside a leverage.
Just like in the sugar sector, the milk sector in Kenya is run by cartels who hate seeing any public sector within the milk industry prosper.
Farmers celebrating the move to impose 16 percent VAT on milk from Uganda are in for a rude shock because the pain has just begun.
Before imposing the 16 percent VAT on milk from Uganda, the government should have thought of what is ailing the sector in the first place. For instance, it doest make sense to buy milk from a farmer at 18 shillings and sell the same at 105 shillings. That is an economic crime.