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Kenya has protested against a price cap imposed by the Iranian government on tea exports to the country- placing the Sh4 billion market at the centre of a diplomatic tiff with Tehran.
Iran has instructed Kenya to set the maximum tea price per kilo to the Asian country at $3 (about Sh300), with higher prices attracting a punitive tax.
“Kenya is seeking clarification as well as relaxation of the new rule that has been put in place by the Iranian government,” says the Director General of Agriculture and Food Authority, Anthony Muriithi, in an interview.
Kenya’s tea gets to Iran at about Sh400 per kilo, pricier than other teas sold in the country, mainly from India and Sri-Lanka.
Its quality is however superior in comparison to the others, making it highly sought after by the Iranians.
Muriithi says market factors make it difficult to sell at Sh300 per kilo in Iran.
“Some of the factors that might make it difficult to achieve the Sh300 per kilo include the high quality of Kenyan tea, cost of production and shipping costs” he says.
Nairobi has been courting Iran to become one of the major consumers of Kenya’s tea and has held sales exhibitions in Tehran aimed at wooing buyers.
Iran has a large population of more than 80 million people with a per capita tea consumption of 1.4 kilogrammes against half a kilo for Kenyans. The country imports more than 100 million kilogrammes of tea, with Kenya supplying about 20 million kilos annually.
Pakistan is the biggest consumer of Kenyan tea. It buys more than 40 percent of the total beverage produced in Kenya, fetching the country about Sh50 billion a year.
Egypt, the United Kingdom, Sudan and the United Arab Emirates are the other major consumers of Kenya’s tea.
Export volumes to these countries have however declined over the years hampered by trade barriers from different States.
The East African Traders Association (Eatta), which manages the Mombasa tea auction, terms Iran as a key market that Kenya cannot afford to lose given its high growth potential.
“We have to do all that we can to ensure that the new rule is reversed to protect our sales to that country,” says Eatta Managing director, Edward Mudibo in an interview.
In January last year, Kenya almost lost the critical Pakistani market as the country raised concerns over possible contamination of aflatoxin in the commodity, requiring the beverage to undergo rigorous tests that created a backlog on consignments destined to Islamabad.
The Plant Protection Board of Pakistan had issued a directive that all tea imports from Kenya must undergo aflatoxin tests, a move that Kenya protested, saying it is not a common occurrence in the produce.
The impasse was resolved following a meeting between the two States. Small-scale farmers affiliated to the Kenya Tea Development Agency (KTDA) earned a record gross payment of Sh85.74 billion in 2017/2018 financial year, riding on a bumper harvest that defied the fall in global market prices, marking the third year of improved earnings.
At Sh85.74 billion, Kenya’s tea earnings were up 9.4 per cent compared to the previous season’s total income of Sh78.31 billion, according to the agency.
