The Mombasa tea auction has recorded its highest level of unsold tea this year, with industry stakeholders attributing the trend to the recently introduced tea export levy and rising logistical costs linked to the ongoing conflict in the Middle East.
Market players say increased export expenses and higher shipping charges have made Kenyan tea less competitive internationally, dampening buyer demand at the region’s largest tea trading hub.
During Sale 22 of the weekly auction, only 9.19 million kilogrammes of tea were sold out of the 12.52 million kilogrammes offered, leaving about 27 percent unsold. This marks the highest proportion of unsold tea recorded in 2026.
The situation has steadily deteriorated over recent weeks. Unsold volumes stood at 22 percent during Sale 20 before rising to 23 percent in Sale 21 and eventually reaching 27 percent in the latest auction.
The growing trend has raised concerns within the East African Tea Trade Association (EATTA), which manages trading activities at the Mombasa auction.
EATTA Managing Director George Omuga said the sector was grappling with disruptions in global shipping networks caused by tensions in the Middle East, alongside the impact of the Tea Levy Regulations, 2026, which took effect on May 1.
According to Omuga, shipping delays and increased freight costs have disrupted tea exports, while the new levy has raised the cost of doing business and weakened demand at the auction.
Under the new regulations, tea exporters are required to pay a levy equivalent to 0.8 percent of the auction value or customs value for direct exports. Tea importers, meanwhile, are charged a levy equivalent to 100 percent of the import value for every consignment of made tea.
Unlike teas from other countries traded through the Mombasa auction, the levy applies solely to Kenyan tea, placing it at a pricing disadvantage compared to competing products from neighbouring producers.
Concerns Over Competitiveness
Industry stakeholders argue that the additional charge is already affecting Kenya’s competitiveness, with some buyers reportedly shifting interest towards tea from Rwanda and Burundi, which is not subject to similar levies.
The impact is expected to be felt most keenly by farmers whose tea is marketed through the Kenya Tea Development Agency (KTDA), which accounts for roughly 60 percent of all tea sold at the auction.
Tea Buyers Association Chairman Peter Kimanga warned that the levy could ultimately reduce growers’ earnings by increasing costs across the tea value chain.
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Kimanga noted that since the levy took effect, KTDA has been remitting substantial amounts in export charges each week. If the levy remains in place, he said, the additional costs are likely to be reflected in lower farmer payouts and reduced annual bonuses.
According to the association, exporters are currently paying approximately KSh 80,000 per container in export levies before tea leaves the country.
Farmers Face Double Burden
The industry is also contending with rising transportation costs caused by the Middle East conflict, which has forced shipping lines to adopt longer and more expensive routes.
Kimanga warned that tea farmers may bear the combined burden of higher freight expenses and the new export levy through reduced earnings.
He further revealed that buyers in Pakistan, one of Kenya’s largest tea export destinations, have expressed concerns over the levy, arguing that it unfairly targets Kenyan tea and could influence future purchasing decisions.
While Kenyan tea continues to enjoy a strong reputation for quality, he cautioned that higher costs could erode its competitive advantage in key international markets.
The Ministry of Agriculture expects the new export levy to generate about KSh 1.38 billion annually, pushing total tax revenues collected from the tea sector to more than KSh 1.4 billion each year.
