Nyeri: Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe has assured smallholder tea farmers that their earnings will not be negatively affected by the newly introduced tea levy. Kagwe has clarified that the levy will neither be imposed as a tax on farmers nor will it be deducted from the tea factories that the farmers are affiliated to. He said that the levy will be charged on overseas tea buyers importing Kenyan tea and will be charged at a rate of 0.8 per cent.
According to Kenya News Agency, while clearing the air on the controversial charge, CS Kagwe said that the levy is a strategic investment aimed at positioning the country’s tea in the global tea market. Kagwe explained that the levy is not a tax and does not affect farmer or factory earnings. The tax is designed for overseas buyers, ensuring that local consumers and farmers are not burdened. The levy will help operationalize the Tea Act 2020, promoting and marketing Kenyan tea abroad.
The Tea (Levy) Regulations 2026, effective from May 1, imposes a tea levy at the point of export and import. Tea exporters will pay 0.8 per cent of the auction value for direct sales, equivalent to Sh 2.28 per kilogram of made tea. Imports will attract a 100 per cent levy for each consignment of made tea. To promote value addition, exemptions include value-added tea packaged in small containers and tea extracts. Kenyan tea value-added in Export Processing Zones and Special Economic Zones for local consumption is also exempt.
The levy is expected to generate about Sh 1.42 billion annually, administered by the Tea Board of Kenya (TBK), which will use it for revitalizing the tea sub-sector. Regulations allocate 50 per cent for income and price stabilization, 20 per cent for tea research, 15 per cent for regulatory functions, and 15 per cent for infrastructure development, including road construction and maintenance in tea-growing regions.
Kagwe emphasized that the levy will facilitate the promotion and marketing of Kenyan tea globally, unlocking its demand. He noted Kenya’s need to invest in branding its tea, similar to Colombia’s success with coffee in the United States, to fetch premium prices. He cited other countries like Sri Lanka and India, which charge higher levies to promote their tea industries, highlighting Kenya’s competitive rate.
Kagwe added that the levy will support the implementation of a market development strategy, opening new tea markets in China, West Africa, Russia, North America, Asia, and the Commonwealth of Independent States. He stressed the importance of promoting geographical indicators so that Kenyan tea becomes a recognized brand worldwide.
Speaking at Gathuthi Tea Factory in Tetu, Nyeri county, Kagwe delivered a Sh 65.2 million cheque to the factory. The grant from the National government will support the construction of an automatic withering plant, enhancing production and value addition.
The CS was accompanied by TBK board chair Ndung’u Gathinji, TBK CEO Willy Mutai, Kenya Tea Development Agency (KTDA) Manager Sustainability and Certifications Kanja Thuku, among other directors from tea agencies. Gathinji announced a partnership with KTDA, the National Treasury, and the Ministry of Agriculture to implement a factory modernization program, addressing challenges from aging equipment, rising production costs, and global competition.
Gathinji assured farmers that the board will continue promoting policies and programs to improve tea quality, expand markets, strengthen sustainability, and enhance farmer returns.
