New Tax Drives Up Cooking Oil Costs, Farmers and Consumers Suffer
Manufacturers of vegetable oils are urging the government to remove the 10 percent import duty on crude palm oil, which they argue has led to a sharp increase in the price of cooking oil. Billow Kerrow, spokesperson for the Edible Oil Manufacturers Association of Kenya, revealed that the association has formally requested the National Treasury to eliminate the tax, claiming it makes local products less competitive.
Mr. Kerrow expressed frustration that the industry was not consulted before the tax was imposed. He described the move as an “ambush” with excessive and punitive taxes. Since the new tax took effect on July 1, the price of a 20-litre container of edible oil has risen by over Sh400, now retailing at Sh3,800.
The import duty on crude palm oil, a crucial raw material for cooking oil production, was introduced following Kenya’s successful application to the East African Community (EAC) Council of Ministers. The decision, published in the EAC Gazette notice on June 30, aligns Kenya with Uganda, the only other EAC member state applying the tax.
Cooking Oil Producers Fight Back Against Tax Hike
Manufacturers are questioning the rationale behind Kenya’s decision, particularly since the country imports all its crude palm oil. The new tax adds to an already high tax burden on the product, which now totals 32 percent, including VAT at 16 percent, an Import Declaration Fee of 2.5 percent, a Railway Development Levy of 2 percent, and an Oil Crops and Nuts Development Levy of 2 percent.
Mr. Kerrow, who is also the chairman of Darfords Industries Limited, warned that if the tax remains, manufacturers will be forced to pass the increased costs onto consumers, potentially making the product unaffordable for many. He also noted that the tax could reverse recent price drops in vegetable oil due to a stronger shilling and lower export quotas from major suppliers like Indonesia.
Kerrow highlighted that the tax’s impact extends beyond cooking oil, affecting other products reliant on palm oil processing. For example, 20,000 tonnes of crude palm oil are used monthly to produce soap, supporting over 5,000 jobs. Additionally, the bread and baked goods industry relies on palm stearin, a by-product of palm oil refining, and the tax could increase the price of a 400-gram loaf of bread by about Sh10.
He warned that such price hikes would disproportionately impact vulnerable populations, worsening the cost of living and causing financial strain for many Kenyans.
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