Agriculture Cabinet Secretary Mutahi Kagwe has announced the removal of taxes on packaging materials for agricultural products, a move aimed at revitalising Kenya’s export competitiveness.
Speaking at the North America Tea Conference in South Carolina on Saturday, September 6, Kagwe said the new policy will encourage international investors to package products, especially tea, at the source. He explained that this reform will reduce costs, enhance value for farmers, and ensure Kenyan exports meet international market specifications.
“By packaging at origin, we eliminate unnecessary costs, improve competitiveness, and strengthen Kenya’s position in the global tea market,” Kagwe stated.
Until now, exporters had been struggling under a 25 percent excise duty on packaging materials such as kraftliner and kraft paper, introduced in the 2025 Finance Bill. The levy significantly increased production costs. For instance, the cost of a 10kg avocado box rose by Ksh26 to Ksh182, while a flower box increased by Ksh50 to Ksh247.
Industry stakeholders, including the Kenya Association of Manufacturers (KAM), had warned that the tax threatened the competitiveness of Kenya’s key exports such as tea, coffee, avocados, and cut flowers. With packaging accounting for up to 40 percent of retail prices, exporters feared losing ground in international markets.
Kenya’s tea industry, which generated Ksh181 billion in export revenue in 2024, is expected to benefit most from the reform. Currently, most tea is sold in bulk through the Mombasa Tea Auction before being packaged abroad. The new tax relief will make it possible to package tea in Kenya, delivering fresher, traceable, and shelf-ready products directly to consumers.
The move is seen as a significant step toward boosting returns for farmers and strengthening Kenya’s foothold in global agricultural trade, particularly in major export markets such as Pakistan, Egypt, and the UK.
