Effects of Low Tea prices on the Tea markets in Kenya Tea Development Authority. A case of Tirgaga Tea Factory

Abstract

Kenya is one of the most important producers of high quality black tea in the world. As one of the leading cash crops in Kenya, tea makes a significant contribution to Kenya’s economy yet farmers continue getting low prices for this product. This is an issue that can easily be addressed. The purpose of this study therefore aimed to examine and explain the effects of depressed prices of tea in the market for farmers of Tirgaga Tea Factory. The study was guided by the following objectives: investigate on how depressed prices of tea in the market affect the economy of tea farmers; find out whether depressed prices of tea affect the cost of production for tea farmers and evaluate whether depressed prices of tea affect demand and supply in the export market. The study utilized descriptive survey design. The target population was 500 farmers from which a sample of 10% (50) of the total population was obtained for the study. Simple Random sampling was used to select the sample that represented the whole population. Questionnaires and interview schedules was used during data collection from respondents. Data was collected and arranged by coding into computer by use of Excel spreadsheet. The presentation of the study findings was in form of tables, bar graphs and figures. This study found that females form the highest population of Tirgaga Tea Factory meaning that women are no longer lagging behind in terms of economic development. It was also found out that majority agreed that When the price of tea decline, it affects the famers’ general incomes. Furthermore majority agreed that depressed tea prices make farmers reluctant to supply tea to export market. The study concluded that Major portion of the GDP comes from agriculture. Tea production has been great source of employment to one tenth of the country’s population who rely tea. But the farmers are always deprived of the fair price for their products due to improper marketing systems that exist in the farming sector. The study concluded that the majority of the respondents agreed that that the respondents who participated in the study understood well that depressed prices of tea in the market greatly affect the economy of tea farmers. In evaluating whether depressed tea prices also affects all the working and living conditions for farmers, it became clear that when the price of tea decline, it affects the famers’ general incomes. It was also concluded that according to the majority, when prices of tea are depressed they are likely to affect the cost of production for tea farmers; again majority believe that the famers pay more for farm inputs such as fertilizers, seedlings and other facilities as a result of this. On the other side, the conclusion show that; it is very problematic for farmers with a small land as they are likely to suffer more on the issue of depressed prices because they have much lower yields compared to their counterparts in large plantations. The study recommends that: Government should take action against hoarders and market manipulators to control country’s marketing system. Public procurement system should be extended to areas which are deprived of any support from government in marketing their products and the poor farmers should get the ultimate benefit from the program instead of the middlemen. Thus open market sale of fertilizer should be extended. This study will be of great help to the researcher as he understands well the area of his study. Also to the Kenya Tea Development Agency to understand that current effort to diversify tea production is commendable and could potentially impact positively on smallholder farmers, provided that this translates into increased final payments. In terms of government policy initiatives, the governments could assist smallholder farmers in lowering the costs of production by improving access to fertilizers and lowering energy costs and for them to explore market diversification, as well as product diversification. The study acts as well as a source of reference to other researchers.