Eight million kilogrammes of tea stuck in Kenya as Iran war affects export route

Disruption to shipping routes linked to the Iran war has left about eight million kilogrammes of tea stuck in warehouses in Kenya's port city of Mombasa for weeks, threatening export earnings and farmer incomes, the head of the East Africa Tea Traders Association said.

George Omuga, managing director of the association that runs the Mombasa tea auction, said losses since March 1 were piling up to the tune of $8 million per week.

"The current conflict in the Middle East has had a direct impact, a negative impact on this auction," Omuga told Reuters.

No tea was currently leaving for the Middle East, which accounts for 20-25% of Kenya's tea exports, while buyers were also scaling back purchases because even the stocks they had already bought were not moving, he said.

Longer shipping routes

The war has led to widespread disruption to global shipping, with major carriers suspending movements through the Strait of Hormuz and Bab al Mandeb Strait, rerouting vessels around Africa, sending ships in the Gulf to shelter and imposing emergency surcharges across the region.

Kenya exports an average of 100 million kilogrammes of tea annually to Middle East markets, Omuga said.

Tea destined for Pakistan and Egypt was still moving, but only via the longer route around the Cape of Good Hope, driving up freight and insurance costs and squeezing exporters' margins, he said.

The industry was already reeling from earlier geopolitical shocks, Omuga said.

Kenya's need to explore new markets

Before the Ukraine war, Russia imported 29 million kilogrammes of Kenyan tea, but that has since dropped to 5 million kilogrammes, he said, adding the sector and the government needed to develop new markets within Africa to cushion the industry against global turmoil.