The burden of produce cess and other market charges in Kenya’s agriculture

Abstract

The study was conducted to quantify the impact of produce cess and market charges on the cost structure of major agricultural commodities in Kenya under a newly devolved system of government. The study used a blend of qualitative and quantitative methods. Analysis of quantitative data involved computation of total costs, revenues, cess as a proportion of total cost, the impact of cess on costs and cost structure. To assess the impact of cess on costs, regression analysis was used. Results showed that produce cess significantly increased production and distribution costs. A one percent increase in cess raised the average distribution cost by 0.8% and average production cost by 0.2%. Therefore, county governments should review levying of cess to avoid charging it at multiple points. This is important for enhancing food and nutritional security, and improving incomes of households which are dependent on either production or trade in agricultural produce.

Keywords: Agricultural Cess, Trade, Food Security

JEL Classification: Q18, Q13, Q19