Kenya's tea sector in crisis talks over shipping route closure

KTDA Chairman Enos Njeru in a past meeting in Nairobi. [Boniface Gikandi, Standard]

The closure of a major shipping route has forced leaders in the tea sector to convene crisis meetings as they consider using longer routes to reach key export destinations.

The leaders fear that transporting the commodity to international markets would become more expensive if the crisis persists, potentially disrupting the cash flow of tea factories.

A major concern in the sector is that factories may be unable to pay the expected mini-bonus to farmers next month, which might cause an uproar in the tea-growing belts.

KTDA Chairman Enos Njeru said the situation has become extremely serious for stakeholders in the agricultural sector after the closure of the Port of Salalah in Iran, hence the need for alternative routes and markets.

Njeru observed that the Port of Salalah route in Iran serves as a key transshipment hub for many destinations, including Pakistan, the United Kingdom, and several countries across Europe.

“Its closure is likely to have significant consequences, not only for the tea business but also for the broader global economy,” said Njeru.

He urged factory directors to begin sensitising farmers on the potential impacts of the Middle East crisis.

“Since the Port of Salalah has been closed indefinitely, exports to Pakistan and other Middle Eastern countries through this route may be disrupted,” he said.

Njeru further called on factory boards to convene urgent meetings to deliberate on cost-cutting strategies and develop plans to sustain operations.

“In particular, we must consider how we will continue paying our farmers if sales are disrupted for a period during the conflict,” he added.

There are also concerns that factory cash flows may be severely affected, potentially interfering with the first payment to farmers.

“We appeal to factory boards to observe implementation of strict cost-control measures to ensure they meet their monthly obligations,” said the chairman.

Tea value chain expert Peter Kamore suggested that directors encourage farmers to boost local consumption by purchasing at least one packet of tea leaves per month through the check-off system.

“If embraced, the system would help increase local consumption and reduce the volume of tea held in warehouses,” said Mr Kamore.

He added that a structured approach will be developed to ensure the initiative is implemented smoothly across the sector.

Kenneth Muriithi and Francis Kiptanui said the closure of a major port might take longer than expected, requiring factory leadership to engage with farmers as a precaution.

“It is an opportune time for the farmers to be involved in the decision-making to ensure information about the transportation of the tea is known by all,” said Muriithi.

This week, key stakeholders that included the Tea Board of Kenya, East African Tea Association, Kenya Tea Growers Association, Independent Tea Producers Association of Kenya, and Kipchimchim Group met to address the challenges caused by the ongoing Middle East conflict.