Agriculture Cabinet Secretary Mutahi Kagwe has announced the removal of taxes on packaging materials for agricultural products a move aimed at encouraging more investors into the country.

Speaking during the North America Tea Conference in South Carolina on Saturday, September 6, Kagwe explained that the new policy shift will particularly benefit the tea industry by making packaging in Kenya more affordable and attractive for export.

He emphasized that the reform will reduce costs and raise value for producers and buyers. “By packaging at origin, we eliminate unnecessary costs, improve competitiveness, and strengthen Kenya’s position in the global tea market,” Kagwe said. He added that exporters will now be able to package tea at source according to international standards, delivering direct to shelf products with assured freshness, traceability, and improved farmer earnings.

Previously, the government had imposed a 25 percent excise duty on key packaging materials such as kraft liner and kraft paper through the 2025 Finance Bill. This policy had significantly raised production costs, with the price of packaging a 10kg avocado box climbing by Ksh26 to Ksh182, and that of a flower box rising by Ksh50 to Ksh247.

Exporters and manufacturers had expressed alarm over the tax, warning that it would make Kenyan goods less competitive in global markets. The Kenya Association of Manufacturers (KAM) at the time cautioned: “Increasing packaging costs are directly driving up the prices of Kenyan goods, including vital exports like coffee, tea, 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 costs account for 30 to 40 percent of retail prices in Kenya’s export sector, with cartons and kraft paper remaining essential for horticulture and agricultural trade. The removal of the tax is now expected to ease cost pressures while boosting the country’s export appeal.