As a vital inventory for food production, agrochemicals are at the centerpiece of the new food production policies of East African countries. In order to meet with the local food demands of its blooming population, the East African Agribusiness industry requires an adequate supply of quality agrochemical which curbs food wastes and crop damages induced by biological contaminants.
The alliance to increase agricultural output between the private sector and the regional governments is becoming more coherent and formidable. This entry examines the pros and cons of some of the key trends bound to shape the future of the agrochemical supply chain in East Africa.
The New Tax on Imported Agrochemicals
International companies hold the largest market share in the pesticide industry of Kenya. These companies dominate the local market through the efforts of certified local agents who supply their products in the local markets on their behalf.
But a recent tax increase on imported agrochemicals is poised to create a significant impact on the circulation of imported agrochemicals in Kenya. Industry experts predict that the new 16% tax on agrichemicals introduced by the National Treasury will bring about losses in the industry to the tune of $11.5 million. Those bracing up for rougher times ahead in the wake of the new tax code are agrichemical dealers as well as farmers. But the worse hit will be the farmers, as agrodealers will most likely pass the burden of the tax to farmers through increased prices of agrochemical products.
Scrapped Taxes on Farm Inventories
As Tanzania continues to struggle with the local production of farm inputs, the removal of taxes on agricultural inputs is bound to boost the availability of farm inputs to local farmers. However, this could encourage the influx of counterfeit and substandard products in the market.
The presence of counterfeit products in Tanzania’s local markets in the past couple of years have been alarming. These fake products, which are peddled by unpatriotic agrodealers, have been shown to constitute over 40% of the products available in the market.
The latest tax cuts on agricultural inputs are, therefore, a double-edged sword. While its primary goal is to contribute to the rapid growth of agricultural output rates, inadequate regulation of the farm inventory markets, as well as weak control over distribution channels for farm inventories by regulatory bodies, could cause the new tax policy to back-fire and flood the markets with even more counterfeit products.
Ugandan Government’s Push to Minimize Crop Losses
The Ugandan government’s public investment plan has as its priorities the reduction of crop losses to 10%, and agrochemicals, as well as some other farm inputs, are at the front and center of this priority. The government is looking to equip farmers with better pest control mechanisms.
However, the lack of adequate knowledge of agrochemicals by many agro-dealers seems to undermine the latest push for lower crop losses by the government. This is because the primary distribution channels for these products are informal networks of petty distributors and hawkers, who’re usually not adequately knowledgeable about the qualities and hazards of pesticides.
However, some organizations, including the Uganda National Agro-Input Dealers Association (UNADA) are stepping in to spread knowledge of good practices for farm inventory businesses.