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Iran has imposed a price cap on the importation of Kenyan tea, risking a diplomatic riff and billions in losses

Tea Farming in Kenya
  • With a population of more than 80 million people with a per capita consumption of 1.4 kilogrammes against half a kilo for Kenyans, Iran is one of Kenya’s biggest tea markets.
  • Iran has imposed a price cap on one of Kenya’s top exports to the Asian country, throwing trade relations between them into turmoil.
  • Tehran has instructed Kenya to set the maximum price per kilo of tea that it sells to the Asian country at $3 (about Sh300), with anything above the amount attracting a punitive tax.

A new regulation by the Iranian government risks triggering a diplomatic tiff with Nairobi.

Iran has imposed a price cap on one of Kenya’s top exports to the Asian country, throwing trade relations between them into turmoil.

Tehran has instructed Kenya to set the maximum price per kilo of tea that it sells to the Asian country at $3 (about Sh300), with anything above the amount attracting a punitive tax.

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The move has, however, been met with resistance with the country’s Ministry of Foreign Affairs even writing to the envoy in Tehran, asking him to seek clarification and lobby for easing of the new requirement.

“Kenya is seeking clarification as well as relaxation of the new rule that has been put in place by the Iranian government,” said the Director-General of Agriculture and Food Authority, Anthony Muriithi.

Kenya’s tea gets to Iran at about Sh400 ($4) per kilo, making it pricier than other teas sold in the country, mainly from India and Sri-Lanka.

The country, however, has reasons for the high price tag, Kenyan tea is superior in quality compared to the others sold in Iran, making it a highly sought after commodity by the Iranians.

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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 the shipping costs,” said Muriithi.

With a population of more than 80 million people with a per capita consumption of 1.4 kilogrammes against half a kilo for Kenyans, Iran is one of Kenya’s biggest tea markets.

The country imports more than 100 million kilogrammes of tea, with Kenya supplying about 20 million kilos annually.

Nairobi has even held sales exhibitions in Tehran aimed at wooing buyers. The East African Tea Trade 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.

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We have to do all that we can to ensure that the new rule is reversed to protect our sales to that country,” said EATTA Managing Director, Edward Mudibo, in an interview.

This is the second time in two years that Kenya has been locked in a trade dispute with Iran over the commodity.

In 2017, a tussle about the recommended minimum moisture content in the beverage ensued and saw a sharp decline in the volumes exported to Tehran. Iran has a lower limit of three per cent moisture content with an upper cap of eight per cent, but Kenya’s tea normally falls below three. Kenya uses ISO 3720, a global standard that does not stipulate a minimum moisture content.

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