Sorghum farmers want the Treasury to review the excise duty imposed on keg beer in this year’s Budget and have formed a lobby group to spearhead the agenda.
The farmers say the tax, which was introduced in October 2013, is hurting production because demand for the cereal from East African Breweries Limited ( EABL) has declined since its implementation.
In places like Homa Bay, there are farmers who cannot take their children to school because they borrowed money to finance sorghum farming, hoping to use the proceeds to pay school fees and repay the bank loans. Now, however, they are stuck with stockpiles of the crop that they cannot sell.
The wait for a revocation of the tax has been longer than some farmers had anticipated and they are getting desperate.
Farmer Mutiso Kaloki from Kitui said he got tired waiting for his stock of sorghum to be bought and has uprooted what he had planted this season.
“I will never grow sorghum again. I hope to try maize, and if that also doesn’t do well, I will leave my land fallow. It is better to face problems when you know you didn’t do anything than to plant sorghum and get stuck with it. It is frustrating,” said Mr Kaloki.
In Mwingi, some farmers who have been unable to link the depressed demand for the crop to a supply glut, think the fact that they cannot sell their produce is punishment from the Government for voting for the Opposition during the 2013 General Election.
“Yes, we voted for the Opposition, but is that reason enough for the Government to punish us” asked James Mbuvi, a farmer in Mwingi.
“We also have children and families to feed. It is unfair that we live in a semi-arid area and the Government is killing our only source of livelihood.”
EABL has been the catalyst for the growth of the sorghum market, being the biggest buyer for the white variety (gadam) in Kenya for its Senator Keg beer. It launched the brand in 2004, and it was tax exempt until 2013.
However, in the 2013/2014 financial year, the Government introduced 50 per cent excise duty on beer made from sorghum, millet or cassava, greatly depressing demand.
In the brewer’s year to June 2014 financial report, it noted Senator Keg sales had dropped 75 per cent.
The tax led to an increase in the cost of the beer, pushing Senator beyond the reach of the low-income earners for whom it was being manufactured. Industry players expect demand to stay flat for as long as the tax remains.
A Business Beat survey indicates most of the farmers affected by the drop in demand are in the semi-arid areas of Kitui, Tharaka Nithi, Makueni and Homa Bay counties.
They ventured into sorghum farming following a campaign by the Government to get residents to grow the drought-resistant gadam sorghum to boost food security.
“All that effort has been wasted,” said Samson Ikiao, a farmer in Tharaka Nithi.
“Before I started to grow sorghum, I fumbled with many other crops that did not do well because of the weather. I tried maize, tomatoes and onions, but they all failed. I was so hopeful that I would make good money from sorghum, but that is now a dream. People are stuck with whatever they harvested the last season.”