Delays in VAT refunds by the government have hard-hit flower farmers, stalling plans to expand across the country, they now say.
According to the Kenya Flower Council, the government owes farmers up to Sh12 billion, leading to a financial crisis among the large-scale growers.
The council has further noted that the new taxes around the Finance Act would have major implications on the sector, adding that this was eroding investor confidence.
According to the Council CEO Clement Tulezi, the floriculture sector which is the second foreign exchange earner, is facing numerous challenges with little support from the government.
He noted that since August last year, the government had failed to pay VAT refunds, a move that had affected farmers across the country.
“The government owes us over Sh12 billion in VAT refunds and this has a major impact on production and expansion plans,” he said.
Tulezi said engagements with KRA have failed to yield any results.
They had proposed that the government slashes some taxes for the farmers to recoup their losses.
“If the government does not have these funds, we have proposed to the Treasury to instead offset some of the many taxes that farmers are paying,” he said.
On production, Tulezi said that currently, the country was exporting 3,400 tonnes of flowers every week.
Prices of roses in the European market remain low compared to outdoor flowers, with high freight costs further affecting farmers' earnings.
“Currently we are paying 2.6 dollars for one kilogramme compared to 1.9 dollars for our main competitors in Ethiopia,” he said.
Speaking over the weekend, Tulezi added that the 16 percent VAT introduced in the Finance Act would have major effects , with fertilizer prices expected to rise.
“Currently there is anxiety over the Act as it will introduce new taxes and erode all the gains made in the sector while increasing the cost of production,” he said.
Speaking separately, one of the major sector players, Jack Kneppers from Maridadi farm in Naivasha, said the cost of fertilizer had dropped by around eight percent in the last couple of months.
He said that though farmers had not yet come out of the woods, there were some positives despite the high cost of production.
“We have seen freight charges start to stabilise in the last two months, demand is high in Europe and the prices of flowers are reasonably okay,” he said.
