Trade Cabinet Secretary (CS) Rebecca Miano has explained how the agriculture sector benefited from government’s decision to reduce Value Added Tax (VAT) on local tea produce.
In a statement seen by The Kenya Times, Miano said the earnings from tea exports shot by 28% in the last five months.
She stated that the government remains intentional on doubling exports and increasing local production.
“Our efforts to support the key economic sectors have seen the earnings from tea exports in the first five months of the year increased by 28 per cent compared to the same period last year,” Miano said.
The CS explained that the Kenya Kwanza government has successfully negotiated for wider markets for Kenya’s produce and championed value addition initiatives.
“We’ve managed to remove VAT on all teas purchased from local factories for value addition to encourage our farmers to pursue value addition to their products. There lies more incentives and initiatives in the proposed Finance Bill, 2024,” she said.
Tea Board of Kenya Reveals Taxes Reduction Benefits
This comes after the Tea Board of Kenya (TBK) announced that the earnings from the sector increased from Ksh68.73 billion to Ksh88.28 billion.
“By the end of the year, we expect export earnings to rise from Sh180.57 billion last year to Sh211.27 billion. This is Sh30.70 billion more than what the industry earned in 2023,” the board said.
The Board said the average payments to small holder tea farmers also increased by Ksh9 from Ksh51 in 2023 to Ksh59.02 per kilogramme of Greenleaf.
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According to the Board, farmers expect to earn a minimum of Ksh64 per kilogramme of Greenleaf by the end of the year.
The board noted that the increased yields and earnings have been as a result of several initiatives by the government.
The Board also thanked the government for the distribution of 97,974 metric tonnes of fertilizer to the tea farmers last year at a subsidized cost of Ksh2,500 per 50 kilogramme bags.
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Cooperation with Other Countries
Besides, TBK said the government launched China-Kenya tea trade centre in Fujian province in China in May 2024 to facilitate distribution of Kenya tea in China.
To facilitate distribution of value-added teas, the government plans to establish warehousing facilities Ghana, DRC Congo and United Arabs Emirates (UAE).
The government also negotiated with Pakistan, the biggest market for Kenya tea, to allow for importation of Kenyan tea by the country’s traders.
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