Kenya’s tea industry has recorded its first decline in export earnings in seven years, a sharp reminder of how global demand shifts and currency movements can quickly ripple through rural economies. For the year ended June 2025, export receipts fell by 13.4 percent to KSh 176.76 billion, down from KSh 204.14 billion the previous year. The drop has translated into smaller payouts for smallholder growers and renewed concern across tea-producing regions.
A principal driver of the downturn was a significant reduction in purchases from Pakistan, which typically accounts for close to 40 percent of Kenya’s tea exports. Pakistani imports fell sharply, removing a major outlet for both bulk and mid-range teas and weakening overall auction performance. At the same time, a stronger Kenyan shilling reduced dollar-denominated earnings, with the average exchange rate moving from about KSh 144 to KSh 129 per US dollar over the year, effectively shaving roughly KSh 15 off each dollar earned by exporters.
Price pressure at the Mombasa auction compounded the problem. Average prices slid from around KSh 385 per kilogram in 2023/24 to KSh 322 per kilogram in 2024/25 as oversupply and shifting buyer preferences weighed on values. Lower prices and contracting demand squeezed margins across the value chain, and the consequences were felt most acutely by smallholders. In KTDA catchment areas, bonus payments to growers fell, in some instances by significant margins, tightening household budgets in regions that depend heavily on tea income.
The human cost is immediate and tangible. Farmers in the Rift Valley and western tea belts report tougher choices between school fees, food and farm inputs as bonuses and returns decline. Seasonal labour dynamics are already shifting in response to reduced incomes, and local economies that rely on tea-related spending face slower circulation of cash at market and village levels.
Kenya’s deep dependence on a few major buyers has long been recognised as a systemic vulnerability. While efforts to diversify export markets have expanded Kenya’s reach to dozens of destinations, shifting trade patterns and geopolitical instability in several traditional markets have undercut those gains. The sector’s future resilience will depend on a mix of strategies: moving up the value chain into higher-value, specialty and niche teas; improving quality and traceability to meet changing buyer demands; and implementing hedging or other financial instruments that shield farmgate returns from volatile exchange rates.
Policy and institutional responses matter. Strengthening market intelligence, supporting product differentiation and expanding market access to alternatives such as China and other emerging buyers are practical priorities. At the same time, social safety nets and targeted support for smallholders—temporary subsidies for inputs, bridge financing and ringfenced rural development funds—can blunt the short-term shock while longer-term adjustments take hold.
For the millions of households that rely on tea for their livelihoods, the sector’s recent contraction is a call to both resilience and adaptation. Better risk management, clearer pathways to premium markets and stronger collective bargaining through cooperatives and unions can help producers capture more value. Without such changes, Kenya risks repeating a familiar pattern: dependence on a narrow set of buyers and product lines leaves a once-stable export earner exposed to sudden global shifts.
The immediate task for growers and local stakeholders is pragmatic: preserve household resilience through careful budgeting, seek opportunities to grade and differentiate produce, and press for timely information from growers’ organisations and buyers. Longer-term success will require coordinated action across trade promotion, value-chain upgrading and financial protection mechanisms so that Kenya’s tea sector can withstand external shocks and continue to underpin rural livelihoods.