BTA2023 Kenya’s tea sector is facing renewed uncertainty as escalating tensions in the Middle East threaten export routes and a key market that purchased $32.8 million (KSh4.26 billion) worth of Kenyan tea in 2024.
Rising security risks, airspace closures, higher marine insurance premiums, and cargo suspensions are disrupting logistics for perishable exports, placing pressure on one of Kenya’s most valuable agricultural industries.
Export Routes Under Strain
Recent hostilities in the Gulf region have triggered:
- Temporary airspace closures
- Suspension of cargo flights
- Increased war-risk insurance premiums
- Shipping delays through strategic maritime corridors
Of particular concern is the Strait of Hormuz — a vital shipping lane that carries about 20% of global oil supply. Heightened security risks in the area are increasing freight costs and transit times for exporters.
For Kenya’s tea exporters, longer delivery times pose both financial and quality risks in markets that depend on consistent, fresh supply chains.
Iran: A Top-Ten Buyer of Kenyan Tea
According to the Tea Board of Kenya, Iran imported approximately 13 million kilograms of Kenyan tea in 2024, valued at $32.8 million, making it one of the country’s top ten export destinations.
Data from the United Nations COMTRADE database shows Kenya’s total exports to Iran reached $50.8 million in 2024, with coffee, tea, and spices accounting for more than 90% of trade value.
A report by the Kenya National Bureau of Statistics indicates that while Pakistan remains Kenya’s largest tea market (34.7% of export volume), Egypt, the United Kingdom, the United Arab Emirates, and Iran are critical secondary markets that help stabilise prices during high-production seasons.
Losing or disrupting access to Iran could therefore weaken Kenya’s pricing power in the global tea market.
$40 Million Tea Deal Now in Doubt
A proposed $40 million tea supply agreement aimed at deepening trade ties with Iran is now under threat due to geopolitical instability.
Lee Kinyanjui, Kenya’s Trade Cabinet Secretary, has warned that escalating hostilities — particularly following joint U.S.–Israeli strikes in February 2026 — are disrupting logistics networks and financial channels underpinning Kenya’s trade with the Middle East.
He noted that replacing a top-ten buyer in a highly competitive global tea market would be challenging.
Financial and Currency Risks Emerging
Beyond shipping disruptions, exporters are facing mounting financial challenges:
- Increased scrutiny of transactions involving Iran
- Potential sanctions-related payment delays
- Higher costs from intermediary banking channels
- Currency volatility affecting demand
These pressures could reduce Iran’s purchasing capacity while simultaneously raising costs for Kenyan exporters operating on thin margins.
Broader Trade Context
Trade between Kenya and the Middle East has expanded significantly in recent years:
- Imports rose from $1.32 billion in 2020 to $4.14 billion in 2023
- Exports nearly tripled from $401 million to $1.12 billion over the same period
This growth underscores the region’s importance to Kenya’s external trade strategy — making current disruptions particularly consequential.
What This Means for Kenya’s Tea Industry
If instability persists, Kenya may face:
- Higher export logistics costs
- Reduced competitiveness against India and Sri Lanka
- Contractual risks from delayed shipments
- Difficulty securing alternative large-volume buyers
Tea remains Kenya’s top agricultural export and a critical source of foreign exchange. Prolonged disruption could ripple across rural livelihoods, processing factories, and export earnings.
For now, the government says it is monitoring developments and assessing contingency measures — but market diversification in a saturated global tea industry will not be immediate.
