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Sh1.3bn Kenyan tea held at Karachi port as dollar shortage hits Pakistan


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Sh1.3bn Kenyan tea held at Karachi port as dollar shortage hits Pakistan


A tea plucking machine in operation at a tea estate in Kericho county on January 16, 2023. PHOTO | VITALIS KIMUTAI | NMG

Kenya’s tea worth Sh1.3 billion is held at the Port of Karachi as Pakistan struggles with a shortage of dollars that has restricted banks from issuing traders with the Letter of Credit, which is required before offloading.

Traders say at least 200 containers with 4.8 million kilogrammes of tea are being held at the port, hitting sales back in Kenya and impacting negatively on prices.

The Pakistani traders are also unable to purchase more from Kenya as they lack Letters of Credit to issue to the sellers to guarantee them payment.

Read: Kenya faces tough tea export future in Pakistani cuts

Kenya Tea Development Agency (KTDA) chairman David Ichoho said the situation in Pakistan is set to improve in the coming days following talks with China and the World Bank, aimed at bailing the Asian nation out of the current financial woes.

“I am told that part of the teas being held at the port is being released to the market and we expect the situation to improve in coming days,” said Mr Ichoho.

Mr Ichoho was part of the team that visited Pakistan last week together with the Minister for Agriculture Mithika Linturi.

The withheld tea has also impacted the Pakistani market with the price of the beverage hitting Rs1,600 (Sh750) per kilo from Rs1,100 (Sh517) a month ago due to limited supply.

The Pakistani government has given priority to essential commodities such as foodstuff and medicine in order to preserve dollars.

Pakistan chairman of Tea Association (PTA) Zeeshan Paracha, is quoted by the local media saying that prices would further go up if consignments stuck at the port are not released.

“PTA associations are facing problems in the clearance of documents due to dollar shortage in banks, which means that containers full of tea leaves cannot be released,” the official is quoted by a media outlet in Pakistan.

Kenya said last week that it was pushing for barter trade with rice imports from Pakistan to cushion the country’s largest buyer of tea at the Mombasa auction.

Read: Tea prices continue to fall as Pakistan curbs imports

Last year, Pakistan imported tea worth 234 million kilogrammes with Kenya supplying 191 million kilos equivalent to about 82 percent of the total imports by Islamabad, according to the tea regulator.

Pakistan remains a market for Kenya as it accounts for at least 40 percent of the total teas that Kenya exports to the world market.

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