Market News

Tea traders eye Pakistan-India tiff


Eatta managing director Edward Mudibo. FILE PHOTO | NMG

Kenya is targeting to take over the Sh3.2 billion Pakistani tea imports market from India following a dispute between the two Asian countries that has seen tea from Mumbai blocked from accessing the neighbouring state.

The East African Tea Traders Association (Eatta) says Pakistanis will have to fill the gap with tea from elsewhere due to the standoff, with Kenya — whose unsold stocks are growing — standing to benefit.

Pakistan is the leading buyer of Kenya’s tea importing 40 per cent of the total produce in the country.

“This could be of benefit to Kenya because Pakistani is the leading buyer of our tea and the differences India will see them seek more of the commodity from the country in order to bridge the deficit created by the stalemate,” said Eatta managing director Edward Mudibo.

His sentiments were echoed by Kenya Tea Development Agency (KTDA) sales and marketing manager John Bett who said Kenya can benefit from the 16 million kilo gap that would be created by lack of Indian tea.

However, Mr Bett noted that Kenya might not benefit much though if Pakistan rupee lose value against the dollar.

“Tea is sold in dollars and if the Pakistan rupee sheds its value against the greenback, then it means our tea will be expensive there,” said Mr Bett.

There has been tension between the two nuclear powers following the killing of Indian soldiers by suspected Pakistan-based militants.

In the last financial year, Pakistan imported 184 million kilogrammes of tea from all over the world with 84 per cent of the total volumes (155 million kilos) coming from Kenya. Out of this, KTDA teas accounted for 57 percent of the total exports.

Trade barriers

Kenya relies on Pakistan, Egypt, the United Kingdom, Sudan and United Arab Emirates for tea dollars. However, the volumes purchased by the countries has been going down over the years with exports facing trade barriers from different states.

In January last year, Kenya nearly lost the Pakistan market as the country raised concern over possible aflatoxin contamination in the commodity, requiring the beverage to undergo rigorous tests that created a backlog on consignments.

The Plant Protection Board of Pakistan had issued a directive that all tea imports from Kenya must under-go aflatoxin tests, a move that Kenya protested saying it is not a common occurrence in the produce. The impasse was resolved following a meeting between the two states.