Determinants of export performance of Kenya tea development agency managed factories in Kenya

Abstract

Tea production is the mainstay of millions of people worldwide, majority of them found in the poorest countries of the world. The contribution of the tea sector to the economy of Kenya is enormous as it accounts for 4% of the GDP and indirectly supports 10% of Kenya’s population. Export performance defines the extent to which small scale tea farmers earn their living. The main focus of the study was to find out the determinants of tea export performance in Kenya. About ten 10% of the population in Kenya depends on tea production (Tea Board of Kenya, 2012). The main objective of this study was to establish the determinants of export performance of KTDA managed factories in Kenya. The main variables considered were marketing strategy, firm size, liberalization and technology and how they affect performance. Export performance in the tea industry is affected by massive over production, collapsing prices, deteriorating quality, poor marketing strategy, lack of value addition and the growing inequality along the tea value-chain. The study employed descriptive research and adopted random sampling technique. The actual number of respondents targeted was 84 but 76 were interviewed as the study sampled 21 tea factories out of 65. The four senior managers, FUM, PM, FA and FSC were interviewed. The response rate was 90.5 as 76 questionnaires were successfully filled and analyzed. The respondents were drawn from the target population of 65 tea factories managed by KTDA Ltd which are found on both the East and West of the Great Rift Valley. These are the regions known for tea growing and are divided administratively into 12 zones and seven regions. Primary data was collected using closed and open ended questions and some were on a likert scale. Data analysis was done using a number of tests including Pearson Correlation Coefficient, multiple regression and Analysis of Variance (ANOVA). The study found out that marketing strategy, firm size, liberalization and technology are critical determinants of export performance of KTDA managed factories in Kenya. Government policy which was the moderating variable was found to have a negative effect on Tea export performance in Kenya.