The cost of packaging flowers, avocados and other fresh produce in Kenya has risen by up to 25 percent over the past month following a new tax on packing materials.The excise duty on kraftliner and kraft paper took effect on July 1 through the Finance Act, 2025. Kraftliner and kraft paper are used as raw materials in the manufacture of packaging materials such as carton boxes, packets and wrapping papers. The excise duty has raised the cost of producing a 10kg avocado box by Ksh26 to Ksh182, a flower box by Ksh50 to Ksh247 and a 2kg flour bag by 20 percent to Ksh6.60. Manufacturers and fresh produce exporters have warned of possible loss of markets as Kenyan exports lose competitiveness due to higher prices. “Rising packaging costs are directly inflating the price of Kenyan products, including key exports such as coffee, tea, avocados and other horticultural produce,” the Kenya Association of Manufacturers (KAM) said. It added that the new tax is a significant threat since packaging constitutes 30 to 40 percent of retail prices for flowers, avocados and tea exports.Kenya imports raw materials for producing kraftliner and kraft paper to produce the packaging materials, and the excise duty now makes their importation more costly.Manufacturers estimate that just about a third of the 87,900 tonnes installed capacity for bags and balers is utilised in the country, while 55 percent of the 148,753 tonnes installed capacity for production of cartons is used. “In three years, cumulative tax on kraft paper has increased from less than 50 percent to 111 percent,” said KAM Chief Executive Officer Tobias Alando. The Kenya Flower Council termed the new tax an unnecessary burden, warning that it will raise the cost of doing business for flower exporters, “and put thousands of livelihoods at risk”. It said Kenya’s floriculture industry is already grappling with multiple financial and operational challenges. “The imposition of a 25 percent duty on imported kraft paper would have far-reaching consequences for the floriculture industry, worsening the already high cost of doing business in Kenya. Current costs of packaging will increase by 17 percent,” said the council’s CEO Clement Tulezi.Mr Tulezi said that many growers will resort to absorbing costs and laying off workers as a result of the additional taxes as opposed to raising prices and losing overseas markets, projecting the cost impact at 2 percent. (ICE NAIROBI)

Fonte notizia: The EastAfrican