Effects of Liberalization on income of smallholder tea Producers in central Kenya

Abstract

The focus of this study was to assess the effect of liberalisation of the smallholder tea sector on the income levels of the smallholder farmer in Central Kenya. To achieve this, smallholder farmers were selected using a multi-stage cluster sampling. Three districts were selected, out of which six factories were selected. Namely; Mununga, Kangaita, Ndima, Chinga, Githambo and Gatunguru. Farmers were randomly selected from the factories. A sample size of one hundred and forty four (144) farmers was selected. Pertinent data was obtained for a period covering five years (1998-2002). However most of the secondary data was available for four years; two years before liberalisation and two years after liberalisation (1999-2002). Data was collected using questionnaires. Since data collection was face to face all the respondents answered the questions. The data was analysed using statistical package for social sciences (SPSS). Frequency tables, and averages were presented and statistical tests performed. The study addressed questions on output of smallholder tea farmers, benefits as a result of liberalisation, changes in tea prices in the smallholder tea sector and changes in income of smallholder tea farmers. The results of the study revealed that, liberalisation of the smallholder tea sector did not affect tea output by farmers in Central Kenya. Farmers continued to grow more tea even when tea prices decreased. The results also revealed that the VIII cost of production was related to output per factory. One of the major costs that reduced the income of smallholder tea producers was found to be the factory processing cost. Kenya tea development agency (KTDA) remained the only buyer of tea from the farmers and hence no price competition. The same agency buys and sells farm inputs to the factories for onward distribution to smallholder farmers. Although the farmers reported having planted tea over the last five years, this had not translated into improved yields and hence income. The farmers planted tea since it was the most suitable source of income in the regions. Thus liberalisation did not improve the income of the smallholder tea farmers. Liberalisation meant only changes in management of the tea sector but the functions remained the same as before liberalisation