US-Iran tension threatens to cut Kenya’s tea export

The heightening tension between Washington and Tehran is set to hurt tea earnings from Iran. FILE PHOTO | NMG 

By BARNABAS BII
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Summary

• The heightening tension between Washington and Tehran is set to hurt tea earnings from Iran, industry players have warned, in what could add to the woes of a market where strict exchange controls have traditionally delayed payment for shipments.
• Stakeholders in the tea sector yesterday petitioned the government to craft remedial measures amid a general slump in the global tea market.
• Export of Kenya’s tea to Iran had already dropped to 532,715 kilogrammes in 2019, down from 590,111 in 2018, significantly cutting the forex earnings.

The heightening tension between Washington and Tehran is set to hurt tea earnings from Iran, industry players have warned, in what could add to the woes of a market where strict exchange controls have traditionally delayed payment for shipments.

Stakeholders in the tea sector yesterday petitioned the government to craft remedial measures amid a general slump in the global tea market.

Export of Kenya’s tea to Iran had already dropped to 532,715 kilogrammes in 2019, down from 590,111 in 2018, significantly cutting the forex earnings.

“Some bulk buyers will definitely be scared of selling the commodity to markets in Iran due to fears of attacks which will impact negatively on the sales,” said Gideon Tuwei, an expert in tea auction.

Tension has been rising between Washington and Tehran following the Friday killing of Iranian commander Qasem Soleimani in a drone attack on President Donald Trump’s order.

This comes amid market turbulence that has seen multinational tea companies in Kenya slash prices in tandem with plunging global prices.

Most tea firms, including James Finlay (Kenya) and Kaisugu Limited have cut the prices by three and two shillings from Sh19 to Sh16 and Sh23 to Sh21 per kilogramme respectively due to depressed global prices caused by glut.

“The drop in world tea prices is a total blow considering that we have not recovered from the effect of frost and hailstones that destroyed the crop last year. It might take long before the prices pick up subjecting us to heavy losses unless new markets for the produce emerge,” said Mathew Too from Chepkumia, Nandi County.

The global tea prices have dropped in the past few months sparking protests by farmers who want the government to introduce subsidises to enable them to continue cultivating the cash crop.