US sanctions on Iran hit Kenyan tea cash

US sanctions on Iran is taking a toll on Kenyan tea sales to the Middle East country as the declining volumes cut earnings.

Last week, Kenya Tea Development Agency (KTDA) said its lower first-half earnings in 2018/19 financial year were partly because of the sanctions placed on Iran.

East African Tea Traders Association (Eatta), which manages the Mombasa auction, says the sanctions have cut demand as traders are scared to transact with Iran for fear of not getting paid as banks shy from remitting money from the country.

“The drop has been attributed to increased tea volumes than the market can absorb and partly to the economic sanction imposed on Iran by the US,” said the KTDA.

Eatta managing director Edward Mudibo said Iran has huge potential in terms of consumption. “Iran was taking good volumes and willing to pay good prices for quality Kenyan tea,” he said.

The Tea Directorate visited Iran last year to conduct more campaigns for Kenyan tea to capitalise on the potential that is already there.

The KTDA has warned farmers to brace for low earnings this year following a 17 percent decline in the price of the beverage in the first half of 2018/19 financial year.