The Kenya tea industry keeps experiencing financial setbacks due to the shutdown of the Sudanese market, ongoing restrictions on access to the Iranian market, and the implementation of a new tea tax based on product value. Traders have expressed concerns that these factors together are negatively affecting farmers, export businesses, and the nation's standing in the Mombasa Tea Auction.
Kenyan traders lament the loss of an $80 million opportunity in Iranian and Sudanese tea markets The East Africa Tea Trade Association (Eatta), responsible for overseeing the Mombasa Tea Auction, stated that the prohibition has had a severe impact on the BP1 tea category, mainly acquired by purchasers from Sudan. "We still hold over 1.7 million kilograms of tea intended for the Sudanese market, which were procured in April 2025, and remain labeled and kept in storage facilities in Mombasa," mentioned Eatta’s Managing Director, George Omuga.
The tea was specially packed for Sudanese customers, preventing exporters from rerouting the shipments without facing extra expenses. Purchasers still cover warehousing fees as the tea gradually deteriorates in quality and decreases in market worth during storage.
Apart from the stranded tea, importers had previously poured significant resources into basic and additional packing supplies labeled specifically for the Sudanese market, increasing their monetary setbacks."We possess packaging items valued at several hundred dollars meant for Sudanese tea. We can’t utilize them anymore. This constitutes a loss for us," mentioned Hussein Gulam, a tea seller based in Mombasa.
Eatta mentioned that following Sudan's implementation of the import restriction, the price of BP1 tea has not bounced back. Although certain shipments manage to reach Sudan via third countries after being restocked, this roundabout trading method greatly raises expenses."Farmers are struggling as prices remain low, whereas Sudanese customers end up paying considerably more once the tea passes through other nations before arriving in Sudan," Mr. Omuga stated.
Tea merchants are calling on the Kenyan administration to communicate with Sudanese officials to reinstate direct commerce, contending that Khartoum continues to be one of Kenya's key markets due to its closeness.
In contrast to numerous international markets, tea transported through the Port of Mombasa arrives in Sudan in just three to five days, positioning it as one of the quickest and most economical routes for exporting Kenyan tea.
Market Forces: The organization also voiced worry about Kenya's inability to restore access to the Iranian market, which has traditionally been one of the nation's major purchasers of Orthodox tea.
Even though the Orthodox Tea Auction began effectively in Mombasa in September 2025, those involved in the sector believe growing this area will face challenges unless commerce with Iran is revived.
They caution that extended delays might prompt Iranian purchasers to seek tea from rival production nations, diminishing Kenya's sustained standing in the high-quality Orthodox tea sector.
The sector is pushing manufacturers to shift their focus from conventional Crush, Tear and Curl (CTC) tea towards a greater output of Orthodox and premium varieties.
Mr. Omuga stated that worldwide output of CTC tea has exceeded consumer needs, leading to an imbalance that keeps prices low.
Increasing the output of Orthodox and specialized teas would enhance Kenya's range of products, distribute market risks more evenly, and enable farmers to achieve higher profits through high-value offerings.
The group also stated that dialogue with Iran must persist amid ongoing turmoil in the Middle East, emphasizing that commercial ties should remain intact as much as feasible.
Effect of levy Meanwhile, traders state that market conditions this year should have supported much higher tea prices.
Last year, Kenya's tea output fell by over 50 million kilograms, leading to lower stock levels carried forward into 2026.
Sri Lanka, Kenya's primary exporter rival, is expected to experience a drop in output ranging from 25% to 30% as a result of significant storm-related destruction in its tea-producing areas.
As resources become scarcer among two of the top global tea suppliers, market participants expected a significant rise in prices during the Mombasa Tea Auction.
This projection was interrupted when Nairobi implemented the tea tax in May 2026.
As per merchants, the market responded swiftly, with tea consumption decreasing in the initial two weeks following the policy launch, especially for high-quality teas manufactured east of the Rift Valley.
Rwandan tea makes an appearance at auctions while Kenyan supplies face accumulation due to export charges. Tea merchants link this drop to the choice of implementing the tax based on the worth of tea instead of the amount sold. They claim that a valuation-focused charge disadvantages premium teas by increasing their cost for purchasers, leading numerous global traders to seek out different providers. Consequently, consumers have started favoring teas from western Kenya, Rwanda, Burundi, Tanzania, and Uganda.
As per weekly updates from Eatta, the uptake of tea in nearby nations continues to be robust, surpassing 95% in Uganda and achieving full coverage in both Tanzania and Burundi.
Stakeholders in the industry claim that Kenyan farmers have experienced the highest impact from the tax, noting that high-quality tea produced in eastern regions of the Rift Valley has had difficulty recovering since May even though market demand has improved.
They believe that, in the absence of the tax, bid prices might have ranged from $2.70 to $2.80 per kilogram, backed by lower worldwide output and increased foreign demand.
Tea merchants are currently calling on the government to reconsider the tax and propose charging it based on quantity, or per kilogram, instead of depending on the price of the tea.
As per Eatta, a tax based on volume is the globally recognized approach and would prevent punishing those who produce more expensive teas, while also ensuring income for oversight purposes.
The Mombasa Tea Auction, catering to growers across 10 African nations, continues to be the area's most significant venue for tea transactions.
Key industry players have cautioned that without Kenya regaining important export markets and revising policies impacting competitiveness, local tea growers may continue to lose ground in the global market, even with positive worldwide supply trends. Provided by SyndiGate Media Inc. Syndigate.info ).
