Abstract:
Agricultural market liberalization was aimed at increasing competitiveness of commodity markets.
Tea farming in Kenya, under Kenya Tea Development Authority has been ailed as a success story this
was up to early 1990 when small holder farmers begun agitating for market reforms in the sector in
order for them to have a grater say in the marketing of their produce. The government finally ceded
by converting KTDA into a marketing of agent and manager of factories, farmers were also allowed
to sell their produce to alternative market. The main objective of the study was to find out factors
determining the marketing choice for green tea among the small holder tea farmers. Field survey
was carried out in one tea producing districts in Kenya. Using cluster sampling of farmers in four
villages were interviewed, yielding 182 questionnaires from a target population of about 2000
farmers. The dependent variable was market choice either a farmer was selling to KTDA or not i.e.
to multinationals through middle men. Given the binary nature of the dependent variable, a
probability (in this case logit) model was used to predict farmers’ decision on market choice. The key
descriptive findings were that farmers supplying KTDA were on average older, less education, had
more land under tea and had larger families. Farmers selling to middlemen were generally younger,
higher educational status, smaller family sizes. There was a significant gate price differential with
KTDA paying lower monthly price but offered bonus that comes at end of financial year. Logit
regression results predicted that institutional factors mainly promptness in payment, quality
requirements and flexibility in collection of green tea, and gate price predicted favourably a farmer’s
decision to sell to middlemen. It is recommended that KTDA should be more responsive to financial
needs of the farmers by reducing the period of bonus disbursement to not more than three months.
Each factory should be operated independently so that looses can be attributed to particular factory
management, this will increase competitiveness in the tea sub-sector.