Food Crop Regulation 2018- what you need to know
Kenya enacted the Crops Act some time in 2013. This is the law that provides for the growth and development of agricultural crops in Kenya. To be able to operationalize this piece of legislation, supporting subsidiary legislation are required. Enter the Crops (Food Crops) Regulations 2018.
The Cabinet secretary and the Agricultural and Food Authority (AFA), the government body with the mandate to enforce the Crops Act 2013, are currently drafting the food crop regulations in view of addressing various challenges in the agricultural sector. These include lack of regulation of value chain players, exploitation of farmers by middlemen, lack of data on the food balance sheet that is needed to inform policy development, food safety challenges from farm to fork, pollution of the environment from agricultural activities, and many others. The draft was taken to the public for consultation in March 2019. However, going by the public reaction, it seems that there are a lot of issues that need looking into before these regulations are passed as law.
Whereas the Agricultural Food Authority should be stimulating growth and development of the agricultural sector by providing incentives such as access to inputs and creating an enabling environment such as making it easy to do business to improve productivity, it would appear this proposed regulation would have the opposite effect.
5 things you need to know
- Impediments to free movement of food commodities
Several provisions in the regulations may impede freedom of movement of foods within the country and between Kenya and its trading partners. The regulations introduce crop movement permits for consignments of 5 tons and above. This means for example, a farmer with 200 tons of grains will have to visit the county offices 13 times for certificates to be able to move all his grain to a buyer, if he uses a 16 ton truck to ship grain on daily basis. Kenya produces in excess of 3.5 million tons of maize in a year. I will leave it to you to compute how many hours will be wasted to process these certificates. All I can say is, this will be costly and a headache to farmers, dealers and food processors moving food from regions of surplus to areas of deficit. Moreover, AFA will be issuing import and export permits, in addition to other state agencies that are currently doing the same, and this will increase red tape.
- More fees and levies
Looks like government is not running out of ways to squeeze coins from the tax payer’s pockets any time soon. Farmers, traders, warehouse operators and food processors will need to be registered and licensed at a cost, and this is on top of the single business permits they already pay for dearly to the bloated and cash-strapped county governments.
“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”- Winston S. Churchill
Importers and exporters will also have to pay a levy of between 1.5 and 3% of the customs value of the goods. This is on top of the import duties and taxes already existing. Now, any economist will tell you that you are better off producing surplus and exporting to get foreign cash inflows. Currently, Kenya is a net importer, with the balance of trade is heavily skewed. One is left to wonder how these additional levies will help grow the agricultural industry.
- Price setting
The era of price controls is not over! And, it would appear that lessons have not been learned. Government has been intervening to set the price of maize for decades and this has not incentivized any growth in maize volumes. In fact, maize volumes have stagnated over the last 10 years. Nevertheless, this subsidiary legislation has provisions for regulating food crop prices, needless to say that such interventions get on the way of developing a mature economy. For instance, it would not be possible to implement warehouse receipting systems and commodity exchanges in the face of price controls. Warehouse receipting systems issue farmers title documents for their commodities and enable creditors to extend loans on the basis of such receipts. In commodity exchanges, these receipts can be traded in a market with its own price discovery. Commodity exchanges also enable trading of futures and options allowing farmers to trade crops which have not even been planted or harvested yet.
- Stringent food safety controls
A nation is as healthy as the food it consumes. The regulations will now make it illegal to use raw manure and will control farming around water bodies and areas activities that produce contaminants. Why you ask? Application of fertilizers and manure are normally to blame for a number of food borne illnesses world over. Manure may contain bacteria such as E. Coli that could end up in the crops. Besides, two of the most prominent farming contaminants in water bodies near agricultural areas are nitrates and coliform bacteria. These regulations make it illegal to produce food crops on soils that are contaminated with heavy metals, toxic chemical substances and harmful pathogenic organisms. This is a good thing. What is the problem..? Well. The question is, do farmers have capacity to test soil for all contaminants for which this law holds them liable should contaminated foods be traced back to their farm? This regulation requires dealers and food processors to ensure traceability of the products they handle from farm to fork.
- Declaration of food inventories held
Warehouse operators, dealers and food processors will be required to declare amount of produce they have in the stores on monthly basis. The regulation is aptly annexed with forms that will need to be filled in. This raises a number of concerns, including the extra work load imposed on businesses and data privacy concerns. Besides, the regulations fail to provide safeguards for how that data will kept confidential and what it can be used for.
What are your views on the Crops (Food Crop) Regulations 2018? Leave the comments below.
