Finance Bill 2026: How proposed tax shifts will impact feed industry value chain

KENYA – It is that time of year when the government sits down to evaluate what it has done over the past year and how much it can allocate for the next. The Finance Bill 2026 has officially begun the long law-making process, with public participation ending yesterday.

But have you read the Bill? 

Do you know what it says and the implications it could have on the feed, agriculture, aquaculture and blue economy sectors throughout the value chain? 

Because every time a tax or policy change is made, whether positive or negative, it affects everyone.

From the manufacturer importing raw materials to the feed miller producing animal and fish feed to the farmer raising poultry or fish to the transporter, retailer, and ultimately the consumer buying food products, every player in the chain feels the impact.

If you do not have the time to go through the entire Finance Bill 2026, here is how you could be affected if the proposed changes are implemented.

VAT exemption on inputs or raw materials

One of the key proposals in the Finance Bill 2026 that could reshape the feed and aquaculture space is the planned VAT exemption on selected raw materials and inputs used in the manufacture of animal feeds. 

On paper, this is positioned as a cost-relief measure for producers who have continued to grapple with high input costs, foreign exchange pressures and supply chain disruptions.

For feed manufacturers, this could translate into reduced production costs, particularly for those relying heavily on imported inputs such as premixes, amino acids, vitamins and specialised additives, which is the case for most millers. 

In a sector where margins are often tight and input costs dominate the pricing structure, even small tax adjustments can have a meaningful effect on competitiveness.

In theory, lower production costs should flow downwards into the value chain. 

Livestock and aquaculture farmers could benefit from more affordable feed, which remains the single largest cost driver in both poultry and fish production. 

In aquaculture, feed alone can account for up to 70% of total production costs, meaning any downward adjustment can significantly affect profitability and expansion decisions.

A more affordable feed environment could therefore encourage increased fish farming activity, expansion of pond and cage systems, and improved productivity among existing farmers. 

This would not only support farmer incomes but could also strengthen local fish supply, reducing reliance on imports and stabilising market availability over time.

The ripple effects would extend further along the value chain. 

Hatcheries, feed distributors, transporters, processors, cold chain operators and retailers would all stand to benefit from increased production activity and improved sector performance.

However, industry players will be watching closely how these VAT changes are implemented in practice. 

A key concern emerging from the proposed changes is the shift in feed inputs and raw materials from zero-rated VAT status to VAT-exempt status.

While the two may sound similar on paper, the financial implications for manufacturers differ significantly.

Under the current zero-rated framework, manufacturers do not charge VAT on the final feed product.

However, they are still allowed to reclaim VAT incurred on inputs and production-related expenses across the value chain.

This helps prevent additional tax costs from being absorbed into production.

Under the proposed exempt framework, manufacturers would similarly not charge VAT on the final product.

However, they would no longer be able to recover VAT paid on inputs, utilities, transport, and other operational costs associated with production.

This effectively means some tax costs become embedded within the manufacturing process itself.

As a result, what may initially appear to be a relief measure for the feed industry could, in practice, increase hidden production costs that may eventually be passed down the value chain to farmers, distributors, retailers and ultimately consumers.

Digital taxation and transaction costs

Beyond feed inputs, the Bill also introduces broader implications through proposed changes affecting digital financial transactions. 

As the agriculture and fisheries sectors become increasingly digitised, from mobile money payments to online procurement and supplier settlements, any increase in transaction costs could raise operational expenses across the board.

This could be particularly significant for small and medium-sized enterprises in aquaculture and agriculture, where margins are already tight and digital platforms are central to daily operations. 

Even marginal increases in transaction costs can accumulate across the value chain.

At the consumer level, the outcome will ultimately depend on how these cost changes balance out. 

If feed costs decrease meaningfully, there is potential for stabilised or slower-growing prices for fish, poultry, eggs and other animal protein products. 

However, if savings at the production level are absorbed by rising logistics, energy or transaction costs, the benefit may not fully reach the end consumer.

The blue economy sector also appears to be indirectly referenced rather than directly targeted in the current proposals. 

There are limited explicit incentives addressing fisheries infrastructure, aquaculture equipment, cold chain expansion or fish processing investments. 

This leaves a gap that industry stakeholders may seek to address during the parliamentary debate stage.

As it stands, the Finance Bill 2026 presents a mixed outlook for the feed, agriculture and aquaculture sectors. 

It signals potential relief on input costs, while simultaneously introducing or maintaining pressures in other areas of the value chain. 

The final impact will ultimately depend on how Parliament refines the proposals and how implementation is handled once the Bill is enacted into law.

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