A new Kenyan export levy has pushed buyers at the Mombasa tea auction toward untaxed Rwandan and Ugandan leaf, leaving more than 10 million kilograms of Kenyan tea unsold in warehouses.

The Tea (Levy) Regulations 2026, gazetted on April 1 and in force since May 1, charge exporters about Sh2.28 per kilogram of made tea, equivalent to 0.8% of the auction or customs value. The East African Tea Trade Association said Mombasa warehouses held 10,554,071 kilograms of made tea as of early June, with factories east of the Rift Valley selling 13,327,633 kilograms against an offer of 22,470,290 kilograms in that period, EATTA managing director George Omuga said.

The levy applies to tea exported through Kenya's own auction and customs channels but exempts transit tea, leaving Rwandan, Ugandan, Tanzanian and Burundian leaf untaxed at the same sale. At the most recent reported auction, Rwandan tea averaged Sh354.75 per kilogram against Sh299.28 for Kenyan tea, according to auction data reported by Kenyan trade press. Peter Kimanga, chairman of the Tea Buyers Association, said Kenya Tea Development Agency factories, which handle the largest share of Kenyan tea, have paid substantial sums in levies every week since May 1.

The price gap has hit individual factories hard. At Rukuriri, in the Mount Kenya growing region, weekly sales volume fell from an average of around 1,800 packages to about 40 in early June, according to reporting cited by Kirinyaga Senator Kamau Murango. Kiharu MP Ndindi Nyoro has also raised the unsold stocks publicly.

Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe has defended the levy as part of broader reforms intended to raise farmer earnings, with the government targeting a green-leaf price of Ksh100 per kilogram by 2027. Officials have said the levy is charged at the point of export and import and is not deducted from growers' pay.

KTDA-managed factories account for the bulk of Kenya's smallholder tea, the segment whose auction returns this publication has previously reported are already thin in real terms. A levy that diverts buyers to untaxed neighbours adds a further squeeze at the same point in the chain.

Sources: The Standard, Rwanda tea earns higher auction prices as Kenya lags; The Standard, More stocks of unsold teas are back in the warehouses over the levy; Food Business Africa, Rwandan tea leads Mombasa auction as Kenya faces rising unsold volumes.