The Tea Directorate has been courting Tehran to increase the volumes of the commodity it buys at the Mombasa Tea Auction.
Traders will be wary of selling their commodity to Iran because of the expected delayed payment occasioned by the latest sanctions.
The latest move by the US to slap sanctions on Iran’s Central Bank has threatened the sale of Kenyan tea in one of its major markets.
The move comes at a time when the Tea Directorate has been courting Tehran to increase the volumes of the commodity it buys at the Mombasa Tea Auction.
The latest sanctions mean that buyers will be wary of selling their commodity to Iran because of the expected delayed payment occasioned by the latest sanctions, as local banks will be scared of handling money from Iran for fears of reprisal from the US.
“Definitely the move to slap sanctions on the Central Bank of Iran would have negative impact on our tea to that market,” says Peter Kimanga, an exporter with Global Tea Commodities.
According to the sector regulator, as of October last year, Iranian buyers owed local exporters Sh120 million.
Mr Kimanga said that were it not for the fresh sanctions that were imposed by President Donald Trump’s administration last year, Iran could be buying more tea than it does now.
Mr Trump on Friday announced new sanctions on Iran's central bank, calling the measures the toughest ever imposed on another country by the United States.
"We have just sanctioned the Iranian national bank, these are the highest sanctions ever imposed on a country," Mr Trump is quoted by AFP news agency.
The volumes of tea bought by Iran have been going down in the recent months as buyers there delay in making payments for the consignments bought, seeing Tehran slide from the top 10 buyers list.
In June this year, Iran was ranked 11 in the list of the top buyers after the quantities purchased dropped by 10 percent to 532,715 kilogrammes.
In February, Kenya Tea Development Agency (KTDA) said the dip in its first half earnings in 2018/2019 financial year were partly because of the sanctions placed on Iran.
KTDA has warned farmers to brace for low earnings this year following a decline of 17 per cent in price of the beverage in the first half of 2018/2019 financial year.
The average price of KTDA teas in the first half of this period sharply dropped to Sh271 per kilogramme from Sh327 for the corresponding first half of 2017/18 caused by high volumes.
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