Sorghum farmers to lose income over 'keg' tax proposals

At least 17,000 farmers contracted by East African Breweries Ltd (EABL) to supply sorghum could lose their livelihoods if new tax measures are passed.

Treasury has published proposals to cut excise duty remission on sorghum from 80 per cent to 60 per cent. The proposals are currently under public participation process.

KBL, EABL's subsidiary, has argued that the new regulations will lead to an increase in the price of keg beer by Sh10 for every 300ml pint.

This, KBL said, could lead to a sharp drop in demand for sorghum used as the primary raw material in the brewing of keg.

Meanwhile, nearly 30,000 farmers in Tharaka Nithi county face the same predicament.

In a memorandum to the Treasury, a group of farmers in Siaya County have asked the government to rethink the tax proposals citing far-reaching consequences.

“We are aware that this will lead to a significant increase in the price of keg which will result to low-income consumers moving to illicit liquor in the villages," reads the petition.

"As a direct consequence, the breweries will reduce their demand for sorghum grain required for the production of Senator keg.”

The farmers emphasised that youth, who were idle before they started being hired to ferry sorghum to the factory and also to farm it, now stare at unemployment and poverty.

“Many young people previously without a steady source of income have moved to adapt sorghum farming as an economic activity which has helped them in terms of food security, meeting healthcare costs, cash for basic needs and schooling,” the petition asserts.

The petition, signed by one Linnet Otieno stresses that the establishment of the Kisumu keg brewery had opened doors for many farmers.

Ms Otieno said she collects the grain from over 30 farmer groups and takes it to the brewery. Her job too is at risk. “When demand drops, people like me will be rendered jobless,” she said.

KBL has challenged the proposals in a write-up to Treasury. KBL Managing Director Jane Karuku has claimed that the tax proposals will put over 150,000 jobs at stake.