The Middle East is historically one of the largest markets for Kenyan tea and livestock products
Kenya’s tea exporters face uncertainty due to the raging Iran war, which now risks disrupting supplies to key international markets as well as payments from buyers abroad.
The Middle East is historically one of the largest markets for Kenyan tea and livestock products, and the tensions could trigger uncertainty in auction cycles through the Mombasa Tea auction and potentially derail trade and foreign exchange earnings.
“The tea prices at the auction remained firm with over 80 percent auction absorption this week, but the Iran war and the Middle East geopolitical conflict could make Kenya lose over 20percent of the Middle East export market,” George Omuga, Managing Director of the East African Trade Association (EATA), which runs the regional auction, said.
Cargo containers at the port of Mombasa.
He explained that the logistics cost was likely to skyrocket with depressed demand for tea at the auction, which would negatively impact tea prices at the market and the smallholder farmers’ income.
“The logistics disruption caused by Iran blocking the Hormus strait may further impact the 40 percent exports to Pakistan, which may result in a complete collapse of the tea sector should there be no cessation of hostilities between America-Israel and Iran,” disclosed Mr Omuga.
The Mombasa auction depends heavily on buyers from Iran, Pakistan, the United Arab Emirates (UAE), Egypt, and other Middle East markets, and any pullout by buyers or a reduction in purchases would affect millions of smallholder farmers in the country.
“The war could threaten 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 Samuel Kosgei, a tea farmer and economist from Chepkumia, Nandi County.
Kenya in 2024 exported 13 million kilogrammes of tea to Iran valued at $32.8 million (Sh4.2billion).
“Iran is a key importer of our black tea, and the conflict will weaken the international market supply chain and affect farmers’ earnings,” said Mathew Lang’at, another trader and farmer from Nandi County.
Reduced demand
There are fears that the international prices for the commodity will remain low as the Israel-US war against Iran threatens to further complicate the international market situation for Kenyan tea, livestock, and horticulture exports.
“The reduced demand for Kenyan tea and livestock products could push exporters to diversify to other global markets, a shift that might take time,” added Mr Lang’at.
According to the Tea Board of Kenya (TBK), during the year 2024, the total earnings from tea amounted to Sh 215.21 billion, out of which Sh 181.69 billion was earned from exports, Sh18 billion from local sales, and Sh15.52 billion from committed stocks.
This was an increase of 9 percent from the marketed value of Sh. 196.97 billion recorded in 2023.
Pakistan remains the leading export destination for Kenyan tea, having imported 206.27 million kilograms accounting for 34.7percent of the total export volume.
The consignment to Pakistan was worth Sh70 billion.
Other key export destinations for Kenya tea are Egypt, whose import volume was 86.90 million kg worth Sh23.96 billion; the UK (57.44 million Kg valued at Sh16.99 billion); and the UAE (30.50 million kg valued at Sh10.27 billion).
Russia (28.46 million Kgs, Sh7.43 billion); India (17.13 million Kgs, Sh3.94 billion); Saudi Arabia (15.92 million Kgs, Sh6.02 billion); Yemen (14.13 million Kgs, Sh5.52 billion); and China (12.42 million Kgs, 2.73 billion).
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