Saturday, September 6, 2025 – Agriculture Cabinet Secretary Mutahi Kagwe has announced a major policy shift aimed at strengthening Kenya’s agricultural exports. The government has officially removed taxes on packaging materials, a move expected to lower costs and make Kenyan products more competitive in the global market.
Speaking at the North America Tea Conference in South Carolina, CS Kagwe emphasized that the reform is particularly crucial for the tea sector. By eliminating packaging taxes, Kenya aims to attract more investors to package tea locally for direct export.
According to Kagwe, this will enable exporters to package products at source according to international market standards, ensuring freshness, quality traceability, and improved returns for farmers.
“By packaging at origin, we cut unnecessary expenses, enhance competitiveness, and position Kenya more strongly in the global tea market,” Kagwe noted.
Currently, packaging accounts for 30–40 percent of retail costs in agricultural exports. The 2025 Finance Bill had introduced a 25 percent excise duty on materials such as kraft paper and kraftliner, causing a spike in production costs. For instance, the price of a 10kg avocado box rose from Ksh156 to Ksh182, while a flower box increased by Ksh50 to Ksh247.
Exporters and manufacturers had raised concerns that these higher costs risked pushing Kenyan products out of international markets, with organizations like the Kenya Association of Manufacturers (KAM) warning of reduced competitiveness for tea, coffee, avocados, and horticultural produce.
Kenya remains a global tea powerhouse, exporting 598.47 million kgs in 2024, earning Ksh181 billion. Top destinations included Pakistan, Egypt, and the United Kingdom. By scrapping the packaging taxes, the government hopes to boost export volumes, encourage local value addition, and deliver better returns across the agricultural value chain.
