Kenya’s vital tea industry is bracing for potential fallout from the escalating Israel-Iran conflict, despite the geographical distance. The ongoing hostilities threaten to disrupt a crucial market for Kenyan tea and livestock products, raising concerns among farmers and exporters already grappling with a volatile global market.
The recent eruption of the conflict coincided with critical discussions between Kenya’s Agriculture Cabinet Secretary, Mutahi Kagwe, and Iranian Ambassador to Kenya, Dr. Ali Gholampour. These high-level talks were aimed at overcoming existing trade hurdles and expanding opportunities for tea and oil trade between the two nations. The focus was particularly on ensuring Kenyan tea farmers could capitalize on Iran’s robust tea market and the broader tea value chain, a timely initiative given the sector’s current instability marked by depressed prices and an oversupply.
“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,” stated David Lang’at, a tea farmer and economist based in Saos, Nandi County. His sentiments underscore the precarious position of Kenyan tea producers.
Despite stringent US sanctions against Iran over its uranium enrichment program, a humanitarian carve-out allows for trade in food and medicine. This provision has historically enabled Kenya, a key US ally, to continue its tea exports to Tehran. According to international trade data, Kenya’s exports to Iran were valued at an estimated $46.03 million in 2023, with imports from Iran at $28.45 million, highlighting the significant role Iran plays in Kenya’s international trade landscape.
However, a persistent challenge for Kenyan farmers has been the timely settlement of payments, a direct consequence of Iran’s exclusion from the US-controlled international payment system. “Iran is a key importer of our black tea, and the conflict will weaken the international market supply chain and affect farmers’ earnings,” echoed Eric Kosgei, a trader and farmer also from Nandi County.
The domestic tea sector is already under considerable strain. Small-scale tea factories have been forced to reduce payouts to farmers amidst depressed prices at the Mombasa auction. A substantial market glut has resulted in an estimated 119 million kilograms of tea remaining unsold, even as production volumes have increased.
Industry stakeholders fear that international tea prices will remain subdued as the Israel-Iran conflict further complicates an already challenging market environment, potentially deepening losses for thousands of Kenyan tea farmers.
