Agriculture Cabinet Secretary Mutahi Kagwe has announced the removal of taxes on packaging materials for agricultural products, a policy shift intended to attract more investors and reduce costs in the export sector.
Speaking at the North America Tea Conference in South Carolina on September 6, Kagwe said the decision will particularly affect the tea industry by making packaging in Kenya more affordable. "By packaging at origin, we eliminate unnecessary costs, improve competitiveness, and strengthen Kenya's position in the global tea market," Kagwe stated. He added that exporters will now be able to package tea at source according to international standards, supplying direct-to-shelf products with traceability and improved farmer earnings.
Until now, packaging materials such as kraft liner and kraft paper were subject to a 25 per cent excise duty under the 2025 Finance Bill. This had raised production costs across the horticultural sector. The price of packaging a 10kg avocado box increased by 26 Kenyan shillings (US$0.20) to 182 shillings (US$1.37), while the cost of a flower box rose by 50 shillings (US$0.37) to 247 shillings (US$1.86).
Exporters and manufacturers had warned that higher packaging costs would reduce the competitiveness of Kenyan products in international markets. The Kenya Association of Manufacturers (KAM) said at the time: "Increasing packaging costs are directly driving up the prices of Kenyan goods, including vital exports like avocados, and other horticultural products. This trend poses a serious risk to the country's share in the global market and its export competitiveness."
Packaging represents 30 to 40 per cent of retail prices in Kenya's export-oriented agriculture. With cartons and kraft paper remaining essential inputs for horticulture and trade, the tax removal is expected to ease cost pressures for producers and exporters.
Source: Uzalendo News