Value addition: State mulls tax incentives to spur tea sector

Agriculture CS Mithika Linturi (left) receives a token from the KTDA Chairman, Enos Njeru (centre) as Gatundu South MP, GG Kagombe, look on. [File, Standard]

The government is lining up several incentives for the tea sector in a bid to attract value addition.

The incentives, which may involve reduced taxes, are contained in a concept note developed by the Ministry of Agriculture through the Tea Board of Kenya.

Agriculture Cabinet Secretary (CS) Mithika Linturi said the National Treasury and Economic Planning Ministry has already approved the concept note.

It proposes the establishment of a scheme aimed at unlocking the potential of Kenyan tea by providing both tax and other incentives necessary to make local value addition more attractive.

"The scheme will also entail the promotion of a Kenya tea brand and enhancement of orthodox tea manufacturing for smallholder tea factories," said the CS. He was speaking during the Kenya Tea Development Agency (KTDA) Annual Directors Conference in Nairobi on Thursday.

The annual event brings together over 400 directors, senior management and stakeholders of the 71 KTDA-managed tea factories spread across 16 counties.

"Once the envisaged incentives are made available, I urge KTDA-managed tea factories to leverage the incentives to upscale their manufacture of orthodox teas and value addition at factory level instead of continuing to do bulk tea sales," he said.

The CS called on smallholder tea factories to take advantage of the existing global market opportunities for orthodox teas to enhance earnings for smallholder tea farmers.

He said this market is currently not saturated compared to the CTC (crush tear and curl processing) market. "I am happy to note that most KTDA-managed factories have been diversifying to orthodox tea manufacturing," he said.

"The government through the Tea Board of Kenya will not only grant KTDA-managed factories, the licences to manufacture orthodox teas but will also enhance its promotional activities to unlock market access." The CS urged KTDA to continue harnessing the opportunities presented by the African Continental Free Trade Area.