Kenya's Tea Export Industry Faces Challenges Due to Middle East Conflict
The tea industry is Kenya's primary agricultural export product, accounting for approximately 22% of the country's foreign exchange earnings. In 2024, Kenya exported 594.5 million kilograms of tea to 96 destinations, generating a total revenue of 181.69 billion shillings.
Current Challenges
The ongoing conflict in the Middle East is directly disrupting trade flows, with between 6,000 and 8,000 tonnes of tea, valued at around $24 million, currently stuck at the port of Mombasa. Exporters are losing between $8 and $9 million per week, despite the fact that buyers had already acquired these stocks. The disrupted maritime routes are preventing delivery, resulting in significant losses for the industry.
Export Structure and Dependence on Key Markets
The structure of Kenya's tea exports explains the extent of the damage. Pakistan alone accounts for 34.7% of the volume, followed by Egypt, the UK, the UAE, and Iran, which complete the top 5. The Middle East region accounts for 20% of Kenya's tea exports, making the industry highly vulnerable to regional crises.
History of Disruptions
This is not the first time the tea industry has faced disruptions. In 2024, attacks in the Red Sea had already disrupted supply routes, while the war in Ukraine in 2022 had also impacted the sector's revenue. The accumulation of these shocks highlights the need for diversification to reduce dependence on key markets.
Diversification Efforts
To address this issue, Kenya has set its sights on the Moroccan market, the second-largest tea market in Africa after Egypt. In November 2024, the Tea Board of Kenya organized a meeting between a Kenyan producer and a Moroccan distribution company, resulting in a proposed trade agreement. However, adapting to the Moroccan market will not be straightforward, as Morocco consumes almost exclusively green tea, while 99% of Kenya's production is black CTC tea.
Upgrading the Industry
The government is also pushing for the industry to move up the value chain by transitioning from bulk tea exports under foreign brands to developing higher-value-added finished products. This is where the margins of the future will be made, and the industry must adapt to remain competitive.
