Friday, June 13, 2008
Uganda and Tanzania, in their budget proposals for the 2008-2009
financial year, announced measures to cushion their populations against
soaring food prices.
"The government has zero-rated VAT [Value
Added Tax] on wheat flour, milk, and maize flour," Amos Kimunya, the
Kenyan finance minister, said during the reading of the budget in
Nairobi on 12 June. The budget was read concurrently with those of
Uganda and Tanzania.
Kimunya said he would also be proposing
to remove tax on bread and rice while reducing the import duty on wheat
to 10 percent from 35.
The Kenyan government, he said, would
also allow for the tax free importation of maize so as to boost the
country's strategic grain reserve to eight million bags. "This would
help dampen the pressure on maize prices."
violence that especially affected the fertile Rift Valley region early
in the year led to a reduced maize harvest. Additional funding had also
been allocated for the resettlement of internally displaced persons.
Regional fertilizer factory?
are under way with Uganda and Tanzania on setting up a regional
fertilizer factory to offset high costs and ensure long-term
sustainable supplies, he said.
The cost of fertilizer has almost tripled in Kenya since the beginning of 2008.
provisions will be made to give farmers access to affordable credit. At
least 25,000 farmers have benefited from 3 billion shillings (US$48
million) provided under an existing seasonal credit loans scheme,
Other proposals included the scaling up of
agricultural extension facilities for farmers, at a cost of 744 million
($12 million) along with the expansion of the wholesale fresh product
infrastructure to promote business and increase agricultural
"If the prices of basic commodities such as
sugar and flour, are high then the farmers also increase the prices of
their fresh produce so that they can meet these costs," Steven Karatu,
a trader at the Marikiti market, the main fresh produce market in
No price controls
The price for 1kg of maize meal is now between 80 and 90 Kenyan shillings ($1.45) up from 50 ($1.29) in 2007.
Karatu welcomed the new measures outlined in the budget, especially the
tax cuts, he said he would have liked to have seen price controls
"Local retailers might not even adjust their
prices downwards, or they reduce them by 50 cents, which does not
really make a difference," he said.
"If there was a control,
saying that the flour will cost only 50 shillings, then we would be
guaranteed that we will buy it at that price. Right now prices vary
everywhere," he said.
Uganda, proposals were made to improve agricultural production by
increasing the efficiency and effectiveness of the agricultural
extension service through the National Agricultural Advisory Services
NAADS is aiming to develop a demand driven,
farmer-led agricultural service delivery system targeting poor
subsistence farmers, with special emphasis on women, youth and people
The allocation to NAADS went up by 62
percent bringing the total allocation to 97 billion Ugandan shillings
($59 million), Uganda's finance minister, Ezra Suruma, said. The
additional funding would help purchase farming inputs.
additional 50 billion Ugandan shillings ($30 million) was allocated as
credit guarantees for banks that provided loans for agriculture.
Suruma also proposed exempting income arising out of new agro-processing investments from income tax starting in July.
mitigate the effect of soaring transportation cost on food prices,
there would also be tax exemption for trucks with a loading capacity of
at least 3.5 tonnes.
Commercial farming in Tanzania
Tanzania, the finance minister, Mustafa Mkulo, said the government was
encouraging investment in large-scale commercial farming. "Tanzania has
vast arable land and the weather is reliable." he said.
"Rising food prices should be used as an opportunity for the people to earn more income, rather than a curse," he said.
the short-term, Mkulo said, measures aimed at addressing the global
food crisis locally were being contemplated, including either the
banning of exports or increasing export charges.
budget also allocated 1.5 billion shillings to a fund to increase job
opportunities for the youth. At least four billion Kenyan shillings
($64.5 million) had also been set up for the civil contingency fund,
drought relief and budget reserve for use in emergency situations.
key proposals in the Ugandan budget included the improvement of water
storage from the current level of 48 percent to 52 percent of projected
national demand, in addition to the allocation of an additional 37.2
billion Ugandan shillings ($23 million) for the Peace Recovery and
Development Plan (PRDP) for northern Uganda.
The PRDP was launched in 2007 with the aim of eradicating poverty and improving the welfare of the people of northern Uganda.
Source: IRIN NEWS http://irinnews.org