The Ukraine war cut the tea exports to Russia by more than half a billion in March, highlighting the negative impact that the conflict has had on Kenya’s global trade.
Tea Board of Kenya says the earnings from Russia declined by Sh598 million in March as volumes dropped 74 percent to 686,072 from 2.6 million kilos that were achieved in the corresponding period last year.
“During the month, there was a significant drop in exports to Russia due to challenges of market access occasioned by the Russian-Ukraine crisis that caused global economic recession, affecting the commodity market,” said the directorate.
The regulator said tea buyers from Russia have not been active since the war between the two countries broke out on February 24.
The prices at the auction also felt the impact of war with a kilogramme of tea fetching $2.59 (Sh303) in March, having declined from $2.73 (Sh320) in February and $2.68 (Sh314) in January.
The invasion of Ukraine by Russia disrupted logistics along the Black Sea- the main port of entry to Moscow.
Moscow was also slapped with a number of sanctions by the European Union and the US, curtailing Russia from trading in dollars after America banned the country’s Central Bank from using the greenback.
Russia is Kenya’s fifth-largest buyer of tea in terms of volumes and the current standoff has seen it drop to position 11 in March, trailing emerging markets such as Nigeria, Poland, and Afghanistan.
Traders have been jittery about selling tea to Russia, which is one of the top 10 buyers of Kenya’s beverage, for fears that it will take them long to get payments for supplies made as the business is normally transacted in dollars.
Kenya’s tea sector is facing challenges globally following instability and financial woes faced by the country’s top buyers.
Pakistan is the world's largest importer of tea, buying more than $600 million worth last year with Kenya accounting for 83 percent of the total imports having exported beverage valued at $503 million.
Kenyan traders are afraid that Pakistan could impose a limit on what buyers are allowed to import as it battles an economic crisis, a move that will have a significant impact on one of the country’s top foreign earners.