The Israel-Iran conflict may be happening thousands of miles away from Kenya, yet local tea farmers and exporters are scratching their heads.
Iran remains Kenya’s key market for tea and livestock products, and the conflict could derail discussions between the two countries to increase trade opportunities.
The war erupted last week as Kenya’s Agriculture Cabinet Secretary, Mutahi Kagwe, and Iranian ambassador to Kenya, Dr Ali Gholampour, were discussing how to resolve existing challenges to facilitate more trade in tea and oil between the two countries.
The discussions centred on how tea farmers can benefit from Iran’s robust tea market and the entire value tea chain – at a time when the sector faces instability due to depressed prices caused by an oversupply of the commodity against declining demand in the global market.
“The war threatens to weaken the already fragile tea market and subject farmers to further losses caused by the dipping factory prices against the high production costs,” said David Lang’at, a tea farmer and economist from Saos, Nandi County.
Though under sanctions from the US for enriching uranium suitable for making a nuclear bomb, Iran has a small window to trade in food and medicine, which allows Kenya, a key US ally, to continue exporting its tea to Tehran regardless of the sanctions.
According to a database on international trade, Kenya’s exports to Iran were estimated at $46.03 million (Sh5.98 billion) during the 2023 period, while imports from the country were valued at $28.45 million (Sh3.70 billion ) – indicating Iran’s prominence in international trade.
However, Kenyan farmers have in the past struggled to get payments settled in time, given Iran is locked out of the international payment system controlled by the US.
“Iran is a key importer of our black tea, and the conflict will weaken the international market supply chain and affect farmers’ earnings,” said Eric Kosgei, another trader and farmer from Nandi County.
Small-scale tea factories have been cutting payouts to farmers due to depressed prices at the Mombasa auction – with an estimated 119 million kilogrammes of tea unsold due to a market glut, despite the increase in production.
There are fears that the international prices for the commodity will remain low as the Israel–Iran war threatens to further complicate the market situation.
