Tea is a standard hot beverage for the majority of Kenyans, with 76 per cent of the population consuming up to three cups daily.
Drawing its assimilation from two colonial influences, British and Indian, tea has become one of Kenya’s renowned breakfast essentials, whether with milk or just plain, boiled water, sugar and tea leaves this is a beverage of choice for many locals.
According to Kenya Tea Board of Kenya statistics, the country is also one of the world’s biggest exporters of this precious commodity with an average of 450 million tonnes produced each year.
Local consumption is however lower than export across the years elucidating how big the market is across the world.
The low local consumption is also linked to the cost of the finished product, which is way higher compared to a kilo of raw tea.
The situation is so dire that a tea-growing family which earns less than Sh150 per kilo of tea leaves has to dig five times more in their pocket to purchase a kilo of processed product. This is attributed to high production costs, worsened by a tough tax regime.
The international buyers who buy Kenya’s tea from the Mombasa Tea Auction blend the tea abroad and brand it in their company names. This has reduced Kenya’s competitive advantage to the point where it is estimated that with the quality of tea in the country, branding could yield an additional $100 to 200 million in GDP.
While other basic food commodities like flour and milk do not attract VAT, 16 per cent is charged on tea, which is equally basic.
This sub-sector of agriculture is an indirect and direct source of sustenance for over 6.5 million Kenyans and the government has put key policies to ensure stability and improve production in the tea value chain and notably the subsidy on fertilizers aimed at protecting farmers from the high cost of farm inputs.
However, the imposition of VAT on the product takes away gains, only benefiting the export market. Lower prices due to tax exemption is likely to stimulate demand for the product which also has a variety of other by-products like tea soaps and creams that act as antioxidants.
From tea production, packaging, transportation, and also retailing, a tax exemption can contribute to job creation thus stimulating the economy.
A cup of tea in Kenya exceeds economic gains. The beverage holds a key cultural significance as well as its social importance.
A visitor to any Kenyan homestead is likely to be welcomed with a cup of tea. We ought to ensure the continuity of this practice, which can be smoothly achieved by making tea more affordable.
MERCY MWIKALI, Comments on topical issues
