DETERMINANTS OF MARKET CHOICE AMONG TEA FARMERS

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.