Murang'a Farmers Oppose Proposed 0.8pc Tea Export Levy

Tea farmers in Murang'a County, Kenya, have voiced strong opposition to the recently introduced 0.8 percent levy on tea exports, citing concerns over its potential impact on the competitiveness of Kenyan tea in international markets. The levy, formalized under the Tea (Levy) Regulations, 2026, and effective from May 1, 2026, is established under Section 53 of the Tea Act, 2020. While the Tea Board of Kenya (TBK) asserts the levy is crucial for sustainable sector funding, research, and farmer price stabilization, industry stakeholders fear it will increase operational costs and erode market share. This article examines the legal framework underpinning the levy, the arguments for and against its implementation, and its implications for the Kenyan tea industry and legal practitioners.

Kenya's tea sector, a cornerstone of its agricultural economy and a significant foreign exchange earner, is currently navigating a contentious new regulatory landscape. Tea farmers in Murang'a County have publicly expressed their disapproval of a proposed 0.8 percent levy on tea exports, arguing that this additional charge will inevitably diminish the global competitiveness of Kenyan tea. This opposition highlights a broader tension between the government's efforts to create a sustainable funding mechanism for the industry and the immediate economic pressures faced by producers and exporters.

The levy, officially introduced through the Tea (Levy) Regulations, 2026, which came into effect on May 1, 2026, is a re-establishment of a statutory charge under the Tea Act, 2020. The Tea Board of Kenya (TBK), the primary regulatory body, maintains that the levy is designed to bolster critical areas such as research, market development, infrastructure, and farmer income stabilization. However, the concerns raised by farmers and other industry players underscore the need for a thorough legal and economic analysis of this policy, particularly regarding its practical implications for an industry already grappling with global market fluctuations and rising production costs.

This article delves into the statutory basis for the tea export levy, the specific provisions of the Tea Act, 2020, and related agricultural legislation. It will explore the arguments presented by both the government and the dissenting farmers, considering the potential legal challenges and economic ramifications. Ultimately, it aims to provide legal professionals with a comprehensive understanding of this significant development in Kenya's vital tea sector.

The regulatory framework governing Kenya's agricultural sector, including tea, is primarily established by the Crops Act, 2013 (Act No. 16 of 2013), and the Agriculture and Food Authority Act, 2013 (Act No. 13 of 2013). The Agriculture and Food Authority (AFA) was established under the AFA Act to consolidate laws on agricultural regulation and promotion, operationalizing the Crops Act. Within this broader framework, the tea industry is specifically governed by the Tea Act, 2020 (Act No. 23 of 2020), which came into effect on January 11, 2021. This Act established the Tea Board of Kenya (TBK) as a corporate body responsible for the regulation, development, and promotion of the tea industry.

Section 53 of the Tea Act, 2020, explicitly provides for the establishment of a Tea Levy, while Section 54 establishes a ring-fenced Tea Fund. The power to make regulations for the better carrying out of the provisions of the Act is vested in the Cabinet Secretary for Agriculture and Livestock Development under Section 74, albeit this section has faced judicial suspension in the past. Historically, a similar levy was in place but was scrapped in 2016, leading to funding gaps that, according to the TBK, weakened key institutions like the Tea Research Institute (TRI) and affected the competitiveness of Kenyan tea.

Kenya holds a prominent position as the world's largest exporter of black tea, with the sector contributing significantly to the nation's foreign exchange earnings and supporting over 680,000 smallholder farmers. The reintroduction of the 0.8 percent export levy, alongside a 100 percent levy on imported bulk tea for local consumption, through the Tea (Levy) Regulations, 2026 (Legal Notice No. 56 of April 1, 2026), is therefore a critical development with far-reaching implications for this vital economic pillar.

The reintroduction of the 0.8 percent tea export levy under the Tea (Levy) Regulations, 2026, draws its legal authority from Section 53 of the Tea Act, 2020. The Tea Board of Kenya (TBK) asserts that this levy is a necessary measure to ensure sustainable funding for crucial sector activities, including research and development by the Tea Research Institute (TRI), regulatory functions of the TBK, market promotion, and a farmer income support and price stabilization fund. The allocation mechanism, with 50% for farmer income support, 20% for research, 15% for regulatory functions, and 15% for county infrastructure, is designed to be ring-fenced within the Tea Fund established under Section 54 of the Tea Act, 2020, aiming to prevent diversion of funds.

However, the opposition from Murang'a farmers, and other industry stakeholders, stems from concerns about the levy's impact on the competitiveness of Kenyan tea in the global market. While the TBK clarifies that the levy is payable by exporters and not directly by farmers, there is a legitimate fear that exporters may pass on these costs to farmers through reduced auction prices, thereby diminishing farmer earnings. This concern highlights a potential disconnect between the intended beneficiaries of the levy and those who may ultimately bear its economic burden. The TBK has countered this by stating that enhanced regulatory oversight under the Tea Act, 2020, and the competitive auction system will help prevent exploitative practices.

Another point of contention has been the consultation process and the legality of the levy's implementation. While some stakeholders initially questioned the absence of a gazette notice, the Tea (Levy) Regulations, 2026, were gazetted on April 1, 2026, and became effective on May 1, 2026. The TBK maintains that extensive stakeholder consultations were conducted across 20 counties, involving various industry players including the Kenya Tea Development Agency (KTDA) and the Kenya Tea Growers Association (KTGA), to ensure broad participation.

From a comparative law perspective and considering World Trade Organization (WTO) rules, Kenya, as a developing country, has historically enjoyed exemptions from export subsidy prohibitions. However, the Nairobi Ministerial Conference in 2015 saw developing countries commit to eliminating export subsidies on farm exports. It is crucial to distinguish this export *levy* (a tax) from export *subsidies*. While the levy is not a subsidy, its impact on the cost of exports could affect trade flows and competitiveness, which are areas of interest under WTO agreements related to market access and non-tariff barriers. The exemptions for value-added tea products and those processed in Export Processing Zones (EPZs) and Special Economic Zones (SEZs) are intended to encourage local value addition and protect downstream industries, aligning with broader government policy objectives.

The reintroduction of the 0.8 percent tea export levy in Kenya represents a significant policy shift aimed at bolstering the long-term sustainability and competitiveness of the nation's crucial tea sector. While the Tea Board of Kenya (TBK) has articulated clear objectives for the levy, including funding research, market development, and farmer price stabilization, the concerns raised by Murang'a farmers and other industry stakeholders regarding its potential impact on export competitiveness and farmer earnings cannot be overlooked. The legal basis for the levy is firmly rooted in the Tea Act, 2020, and the recently gazetted Tea (Levy) Regulations, 2026, but the economic implications remain a subject of debate and close monitoring.

For legal practitioners advising clients in the Kenyan tea industry, several key areas warrant attention. These include understanding the precise application of the Tea (Levy) Regulations, 2026, particularly concerning exemptions for value-added products and EPZ/SEZ operations. Furthermore, monitoring the practical implementation of the levy and its actual impact on auction prices and farmer payouts will be crucial. Any future legal challenges are likely to focus on the economic burden on farmers, the effectiveness of the ring-fenced Tea Fund, and the adherence to principles of fair administrative action and public participation. As Kenya navigates these reforms, the balance between generating sustainable funding for the tea sector and maintaining its global market leadership will be a delicate and ongoing challenge, requiring vigilant legal and economic oversight.