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Grain value chain/Kenya – A collective win for sorghum value chain actors

05 August 2015

A coordinated effort by stakeholders along the sorghum value chain has seen the government review its decision to impose a 50 per cent levy on the sale of sorghum-based beer. The levy triggered to the country’s sorghum market collapse which resulted in farmers struggling to find alternative markets for the once profitable crop. The excise led to East African Breweries Limited (EABL), the largest buyer to cancel the contracts it held with farmers. The sorghum beer popular for Kenya’s low-income market has given an affordable alternative to the illicit and local brews. The entry of EABL into the market saw sorghum prices rise also affirmed years of investment in the sorghum value chain by various actors including: development partners, research institutes, cereal grower associations and market development experts. Cereal Growers Association (CGA) in collaboration with AGRA, initiated a campaign to have the government reconsider its decision. CGA brought a number of stakeholders together, including the East African Grain Council and EABL to highlight the impact the sorghum excise was having on the agricultural value chain. After Tegemeo Institute(an Economic policy think tank) undertook a study on the impact of the tax on the entire sorghum value chain, its report showed that farmers, transporters and other players in the sorghum value chain lost KES 258 million (US$ 2.66m) in foregone revenues because of the excise duty. In a win for CGA’s efforts and smallholder farmers, the government signed into law an amendment which grants remission of the sorghum beer excise duty at 90 per cent. Finally, after the law was signed, the brewery confirmed that it would reconsider renewing its contracts with sorghum farmers.
http://agra.org/media-centre/news/sorghum-stakeholders-appeal-against-government-tax-on-sorghum-beer-in-kenya/
http://oar.icrisat.org/7840/1/SDPS_16.pdf

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