AN ASSESSMENT OF THE PROFITABILITY OF PRODUCTION OF
SMALLHOLDER TEA FARMERS IN KIAMBU COUNTY, KENYA
BY
KIMANI JOSEPH GICHO
A22/2280/2017
A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS OF THE AWARD OF THE DEGREE OF BACHELORS OF
SCIENCE IN AGRICULTURAL ECONOMICS, OF THE UNIVERSITY OF NAIROBI
DEPARTMENT OF AGRICULTURAL ECONOMICS
© 2019
DECLARATION
I declare that this research proposal is my original work and has not been presented for
examination in any other institution of higher learning.
Signature………………………………………………..Date………………………………….
KIMANI JOSEPH GICHO
A22/2280/2017
This research proposal has been submitted for examination with my approval as the University
supervisor.
Signature…………………………………………………..Date……………………………….
Prof. JOHN MBURU
CHAIRMAN AND SENIOR LECTURER
DEPARTMENT OF AGRICULTURE ECONOMICS
FACULTY OF AGRICULTURE
The UNIVERSITY OF NAIROBI.
i
Acknowledgment
My sincere gratitude to the almighty God for good health, peace of mind and gift of life through
my study. I am greatly thanking my supervisor Prof. J. Mburu and Mr. G. Magambo for good
advice and guidance.
ii
TABLE OF CONTENTS
Table of Contents
DECLARATION .......................................................................................................................................... i
Acknowledgment ii
TABLE OF CONTENTS.............................................................................................................................. iii
LIST OF FIGURES ...................................................................................................................................... v
LIST OF ABBREVIATIONS ........................................................................................................................ vi
ABSTRACT.............................................................................................................................................. vii
CHAPTER ONE ......................................................................................................................................... 1
INTRODUCTION ....................................................................................................................................... 1
1.1 BACKGROUND OF STUDY .............................................................................................................. 1
1.2 PROBLEM STATEMENT .................................................................................................................. 3
1.3 OBJECTIVES ................................................................................................................................... 4
1.3.1 GENERAL OBJECTIVE .............................................................................................................. 4
1.3.2 SPECIFIC OBJECTIVES.............................................................................................................. 4
1.4 RESEARCH QUESTIONS.................................................................................................................. 4
1.5 JUSTIFICATION OF STUDY ............................................................................................................. 4
1.6 LIMITATION OF STUDY .................................................................................................................. 5
1.7 DEFINITION OF TERMS .................................................................................................................. 5
1.8 ORGANIZATION OF STUDY ............................................................................................................ 6
CHAPTER 2 .............................................................................................................................................. 7
LITERATURE REVIEW ............................................................................................................................... 7
2.1 INTRODUCTION ............................................................................................................................. 7
2.2 GLOBAL VALUE CHAIN THEORY .................................................................................................... 7
2.2.1 VALUE CHAIN APPROACH IN MANUFACTURE OF BLACK CTC TEA ........................................ 8
2.3 BENEFITS OF TEA ......................................................................................................................... 11
2.4 ECONOMIC PROFITABILITY OF TEA IN KENYA ............................................................................. 11
2.5 MANAGEMENT OF TEA ............................................................................................................... 12
2.5.1 Integrated Crop Management ............................................................................................. 12
2.5.2 Integrated Pest and Disease Management .......................................................................... 14
CHAPTER THREE .................................................................................................................................... 15
RESEARCH METHODOLOGY .................................................................................................................. 15
3.0 INTRODUCTION ........................................................................................................................... 15
3.1 STUDY AREA; LARI SUB COUNTY ................................................................................................. 15
iii
3.2 THEORETICAL, CONCEPTUAL AND ANALYTICAL FRAMEWORK................................................... 15
3.2.1 Theoretical Framework ........................................................................................................ 15
3.2.2 Analytical Framework .......................................................................................................... 16
3.2.3 Conceptual Framework ........................................................................................................ 18
3.3 FACTORS AFFECTING TEA PRODUCTION..................................................................................... 18
3.3.1 Inadequate capital ............................................................................................................... 18
3.3.2 Unpredictable climatic conditions ....................................................................................... 18
3.3.3 Pest and diseases ................................................................................................................. 18
3.3.4 Price fluctuations ................................................................................................................. 19
3.3.5 High cost of inputs ............................................................................................................... 19
3.3.6 Lack of marketing information............................................................................................. 19
3.3.7 Extension services ................................................................................................................ 19
3.3.8 Poor infrastructure............................................................................................................... 19
3.4 METHODS AND PROCEDURES OF DATA COLLECTION ................................................................ 21
3.4.1 Research Design ................................................................................................................... 21
3.4.2 Target population................................................................................................................. 21
3.4.3 Sampling Procedure and Sample size determination .......................................................... 22
3.4.4 Data Collection Instruments ................................................................................................ 23
3.4.5 Testing Validity of the Research Instrument........................................................................ 23
3.4.5 Testing Reliability of the Research Instrument .................................................................... 23
3.4.6 Data Collection Procedures.................................................................................................. 23
3.5 Data Analysis and Presentation .................................................................................................. 24
3.6 BUDGET ........................................................................................................................................... 25
3.7.1 WORK PLAN AND TIME FRAMES FOR THE RESEARCH PROPOSAL ....................................... 27
3.7.2 WORK PLAN AND TIME FRAMES FOR THE RESEARCH PROJECT .......................................... 28
REFERENCES .......................................................................................................................................... 29
APPENDICES .......................................................................................................................................... 31
APPENDIX 1: LETTER OF INTRODUCTION.......................................................................................... 31
Appendix 2: QUESTIONNAIRE ........................................................................................................... 32
iv
LIST OF FIGURES
Figure 3. 1: Conceptualizes how the identified independent variables relate to tea production. 20
v
LIST OF ABBREVIATIONS
CTC-Cutting, Tearing, and Curling.
ETP-Ethical Tea Partnership.
FAO-Food and Agricultural Organization.
FFS-Farmers Field Schools.
GAPS-Good Agricultural Practices.
GDP-Gross Domestic Product.
GOK-Government of Kenya.
HACCP- Hazard Analysis Critical Control Points.
ISO-Cert- International Organization Standards of Certification.
KEBS- Kenya Bureau of Standards.
KTDA-Kenya Tea Development Agency.
KTDA-MS- Kenya Tea Development Agency Management System.
KTF- Kagwe Tea Factory.
SANS- Sustainable Agriculture Network Standards.
TBK-Tea Board of Kenya.
TESA-Tea Extension Services Assistant.
TRFK- Tea Research Foundation of Kenya.
UAE- The United Arab Emirates.
The UK- The United Kingdom.
vi
ABSTRACT
Next to water tea is the most popular non-alcoholic beverage. There are various kinds of tea,
such as black tea, green tea, oolong tea, flavored tea in the world tea market. Black tea occupies
the majority part of world tea production, Kenya is ranked the third nation that produces tea in
the world. The tea sector is mainly supplied by smallholder farmers who produce about 62 %
of total tea production.
Tea production is through collective action by smallholder farmers and more often it is labour
intensive and offers employment in rural areas where millions of people around the world
depend on tea picking and processing. This study intends to inquire into social economic and
institutional factors influencing tea production and the profitability of tea.
This case study will focus on smallholder tea farmers in Lari Sub-County it will be guided by
two main objectives. The study aims at assessing how the social economic and institutional
factors influence tea production and profitability. The study also wants to establish how the
availability of farm inputs and tea market influenced tea production by the smallholder tea
farmer. Kenya continues expanding tea production and is observed to be the largest World
black tea exporter after India and China.
Descriptive survey design will be used as the research methodology for this study. A valid and
reliable structured questionnaire will be used as the principal research instrument. The major
variables to be examined will be, size of land, extension services, input and labour costs- and
fertilizer, the market of tea, weather conditions.
vii
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Tea (Camellia sinensia) is a major cash crop grown in Kenya and was introduced in 1903 from
India, while its commercialization started in 1924. The use of tea as a beverage has its origin
in China. There are several ways in which the leaves may be prepared but most tea is designated
as green or black. Kenya is ranked third after India and China in tea production (Kagira et al.,
2012). Kenya is also the leading exporter of black CTC teas globally accounting for about 23%
of global exports with KTDA accounting for 13%.
Tea has become the country’s leading export crop earning about KSh 69.77 billion for the year
ended June 2019. This was generally attributed to increased volumes that defied low
international prices in the market and improved weather conditions in tea growing areas the
highlands East and West of Rift. Production of green leaf reached a high of 1.13 billion kilos
of green tea which was processed to 262 million kilograms of black tea sold at an average price
of US$ 2.59 compared to US$ 3.14 the previous year showing an 18% drop.
The performance was realized at a time when there were increments in global tea production
while most of the importing market destinations have been experiencing political and economic
tensions. Global tea production stands at 5.8 billion kilograms while the demand is at 5.6 billion
reflecting a surplus of 200 million kilograms in a similar situation like in the financial year
2013/2014 where the total earnings were 52.97 billion. (KTDA, 2019).Kenya's main export
destinations include Pakistan, Sudan, Egypt, UK, and UAE most of which have had significant
currency devaluation with UK, Pakistan, Egypt and Sudan registering 20%, 50%, 20%, and
70%.
1
The above has been attributed to economic and political challenges and Brexit for the UK. Tea
at the auction is traded in US Dollars therefore currency devaluation reduces the purchasing
power of the consuming population. The US economic sanctions on Iran a major importer also
cut off substantial market for Kenya teas (KTDA, 2019). The 69 factories managed by KTDA
are facing numerous challenges such as the high cost of energy and expensive labour.
On the producer's side, they are faced with challenges of tea hawking that have led to the
reduction of quality and quantity of green leaf available leading to excess capacity adversely
affecting operating efficiency. Tea is one of the most important crops in East and Southern
Africa.
Tea accounts for 4.7% of GDP while employing a larger population and directly to farmers
accounting for 60-70 % of smallholder farmers who depend on tea revenue to cater to their day
to day needs. The tea industry is composed of the large scale producers who have large tea
estates and the smallholder growers (Kagira et al., 2012).
Tea is an important agricultural crop in East and Southern Africa and a major source of income
to countless smallholder farmers who are under the management of Kenya Tea Development
Agency (KTDA) which manages 69 factory units in Kenya. Almost all the factories have
achieved certification based on Sustainable Agriculture Network Standards (SANS), ISO
Certification, HACCP, KTDA-MS Standards and KEBS standards.
Training and support provided by Rain Forest Alliance, Uniliver Kenya, Taylor, Tetley and
Ethical Tea Partnership (ETP) among others. (Mbadi et al., 2010). In Lari Sub-County over
6325 smallholder growers (KAGWE TEA FACTORY, 2019) depend on tea as their main cash
crop though backed up by dairy livestock production and subsistence crop farming.
2
1.2 PROBLEM STATEMENT
Tea production as the main cash crop provides income to the household to acquire their basic
needs but the marginalized and poorest rural farmers rarely benefit due to limited access to
technical skills, market information, infrastructure bottlenecks, and access to credit among
others.
There is also a need to have a valid approach on how to integrate different actors in the value
chain to enhance competition and eliminate disparities. (Mogesi et al., 2018) This calls for an
assessment of factors influencing the mode of payments to farmers and market sustainability
locally and globally.
The current payment system is also not depicting clearly why farmers earn less money thus
there is no trickling down of benefits to the farmers who are the large shareholders. Tea growers
do not dictate prices since prices are determined at the tea auction which largely depends on
the quantity, quality, and packaging. This makes the farmers be a price taker and leads to tea
hawking as the farmer tries to sell their green leaf at better prices (Hazarika et al., 2011)
ignoring the fact that hawking has no bonus payment.
Farmers also need more training through extension and through Farmers Field Schools (FFS)
to empower them on diversification, financial management and new farming practices that will
go a long way in increasing their food systems hand in hand with increased incomes from tea.
The income is low therefore farmers opt for labour intensive approach and also it negatively
impacts savings for them to invest in other enterprises that could improve their livelihoods thus
bringing about rural development and transformation.
3
1.3 OBJECTIVES
1.3.1 GENERAL OBJECTIVE
The general objective of this study is to assess the profitability of small-scale tea production in
Lari Sub-County, Kiambu County.
1.3.2 SPECIFIC OBJECTIVES
1. To assess the profitability of tea production in Lari Sub-County, Kiambu County.
2. To evaluate the socio-economic and institutional factors that influence the level of
profitability of tea production in Lari Sub-County, Kiambu County.
1.4 RESEARCH QUESTIONS
Is tea production by smallholder farmers profitable?
How do socioeconomic and institutional factors influence the level of production and
profitability of smallholder tea farmers?
1.5 JUSTIFICATION OF THE STUDY
The results from the study may be beneficial across several spectrums. The study findings are
expected to show the factors affecting the performance of smallholder tea farmers in Lari Sub
County. This will be significant in providing greater insights into production, resource
allocation, and marketing that contribute towards current declining tea production among
smallholder farmers in Kenya.
The findings will also be of benefit to the government since it will have informed policy
decisions in regards to the tea sector to continue being globally competitive.
4
1.6 LIMITATION OF THE STUDY
The researcher would be faced with challenges such as lack of full disclosure of information
from the Tea Factory Company stakeholders who are the farmers since the information on
profitability, production efficiency and procurement procedures are found to be sensitive and
confidential.
This will be minimized by assuring the stakeholders that the information collected would be
kept confidential and used only for study purposes.
1.7 DEFINITION OF TERMS
1.7.1 Marketing: This is the performance of all business activities involved during the
process of products as it moves from the initial point of production until it is in the ultimate
hands of the consumers involving the process of planning, analyzing, executing and control.
1.7.2 Marketing information: It involves knowledge that is available or will be available,
prevailing demand and supply and various market and commodities of prices offered by
different buyers at different markets.
1.7.3 Integrated Crop Management: Refers to the management of the crop in a holistic
manner keeping it strong, healthy and productive by taking care of soil fertility and plant
nutrition and through control of pests and diseases.
1.7.4 Sustainable Agriculture: These are principles and values for compliance by smallholder
farmers which is an integrated approach that helps both facilitators and farmers implement
sustainable agriculture practices.
1.7.5 Social economical characteristics: Population characteristics expressed statistically,
such as age, gender, and educational level.
5
1.7.6 Traceability: This is where farmers should mix non-certified tea with certified tea.
Certified tea needs to be separated at all stages of transactions, buying centers', during transport
at the reception in the factory in stages of processing up to the dispatch of the final product to
various market outlets.
1.8 ORGANIZATION OF THE STUDY
This research proposal is organized into three chapters. Chapter one will cover the introduction
which will consist of the background of the study, statement of the problem, research
objectives, hypotheses and significance of the study, limitations. Chapter two covers the
literature review which is also divided into various topics. Chapter three constitutes the
theoretical framework, analytical framework and conceptual framework linking the
independent, moderating and dependent variables. The research methodology, which is divided
into research design, target population, sample and sampling procedure, research instrument
and data collection procedure and how collected data will be analyzed.
6
CHAPTER 2
LITERATURE REVIEW
2.1 INTRODUCTION
The study reviews various literature concerning the profitability of smallholder tea producers
in the value chain analysis. It covers both theoretical and analytical literature to understand and
build on what is already known. Reviewed literature will be essential and entail characteristics
of tea production in Lari-Sub-County.
2.2 GLOBAL VALUE CHAIN THEORY
Global value chain analysis originates from the commodity chain approach and investigates
the relationship between multi-national companies and participants in the international value
chain. In this theoretical stream, power relationships and information asymmetry are key
concepts. In this analysis (Gereff et al., 1994) made an important theoretical stream by viewing
value chain repositories as rent. (Nadvi et al., 2004) extends the global chain view to poverty
perspective by assessing the impact of the engagement of local actors on employment and
income. He points out that employment and income positively affected by the inclusion of
companies in the value chains although at the same time workers in global value chains become
increasingly vulnerable to changing employment contacts and casualization of work.
(Gereff et al., 1994) identified four key dimensions of the global commodity chain: output
structure; geographical coverage; the form of governance and institutional framework.
However, he did not indicate how to measure the dimension nor potential benefits of
participating in one chain as opposed to another. Since then the global commodity chain has
become better known as global chain analysis. Value chain research focuses on the nature of
the relationships among the various actors involved in the chain, and on their implications for
development (Humphrey and Schmitz et al., 2002b).
7
Global value chain analysis describes the full range of activities required to bring a product or
service from conception through the intermediate phase of production, processing and
packaging and delivery to the markets for consumers to buy. Analysis, in this case, would be
viewed in vertical integration. Vertical integration also known as product differentiation
involves shifting production to higher value-adding activities within the chain. In tea, this type
of upgrading requires producing countries to vertically integrate intermediate and final
processing activities which are often, value-adding stages of production.
Horizontal integration involves farm level processes. Kenya could attain higher net returns in
the non-value added market, as long as costs of production remain below economic returns.
Nonetheless, upgrading into value-added products offers potentially higher export prices and
is an integral part of export diversification strategies in the face of volatile commodity prices.
2.2.1 VALUE CHAIN APPROACH IN MANUFACTURE OF BLACK CTC TEA
The tea value chain is structured along with a hierarchical relationship with the global buyers
dictating terms to the producers. An inherently asymmetric balance of power relations increases
the vulnerabilities of the producers. At the same time the small producers in this value chain
are not merely passive recipients but dynamic actors who are constantly engaging with the
value chain. (Mansingh et al., 2012)
Most of the activities upstream (Greenleaf production) as well as downstream (marketing and
sales) are usually controlled by the decisions made at the tea-processing factory (e.g., to process
orthodox or CTC). (Loconto et al., 2012)
Black CTC tea manufacture involves different operations from plucking leaves, withering,
processing (CTC) and fermentation, drying, sorting and packing. Each stage involves
characteristic changes in the physical and biochemical composition of the leaves. Thus mostly
it’s vertically integrated and formal.
8
Farmers pluck their tea bushes and take the green leaf to the buying center where it is collected
by leaf carriers. The farmer receives a receipt of the amount of green leaf they have delivered.
The leaf carriers proceed to the factory where they are weighed and taken for offloading.
Proper handling of green leaves from the field to the factory is pre-requisite to obtain good tea.
The green leaf is emptied in troughs for withering. There is a statement “Good teas are made
in the withering house” Withering plays a major role, particularly in CTC manufacturing
contributing significantly to quality.
Processing begins after 3-4 hours after withering. Withered leaf is taken to the CTC machine
that cuts, tears, and curls. This is the crucial step of manufacturing where distortion of withered
leaves is done. The aim is to increase the permeability of leaves cell walls and to mix up a
different compound in the leaves so that oxygen can get through the cell wall and help in
oxidation.
The macerated leaf is taken for fermentation on the CFU-Continuous Fermentation Unit. The
macerated leaf undergoes the process of oxidation of various chemical constituents of tea leaf
through a series of chemical reactions. Color, flavor, strength, and briskness are developed in
this stage. The ex-CFU is taken after 60-90 minutes and directed to the dryers.
Drying is the process of arresting fermentation most factories use FBD-Fluid Bed Dryers.
During drying, the coppery red color of the fermented leaf turns to black and biochemical
changes and to reduces the moisture content of the fermented leaf to the desired level (2.53.0%).
Sorting and grading are done using mechanically vibrated sieves fitted with meshes of
appropriate size. Tea quality is assessed by tea testing, the appearance of the leaf before and
after infusion with boiling water and overall organoleptic impact of the resultant liquor.
9
Tea is then packed into different grades (The primary grades are BP1, PF1 and PD the
secondary grades are Fannings and Dust) and ready for export most factories use outsourced
transport and taken to Chai Trading Warehouses in Mombasa for auction. Local consumption
is still low and locals obtain the PF1 at the FDS-Factory Door Sales.
At the auction, prices are negotiated for batches of bulk tea identified by their place of origin,
season, certification and sampling quality. In a direct sale, samples are sent from the factory to
the overseas buyer, who then offers a price. The tea shipment is tested for compliance with
relevant food safety standards, and the shipment is sent over land and sea to the importing
country and buyer. (Mohan et al., 2010)
Buyers who purchase made tea from the factory are the lead firms in tea GVCs. After sourcing
the made tea from processing factories in producing countries, professional tea tasters mix
different lots of tea, sometimes with other ingredients, into a blend that meets the firm's taste,
colour and brewing requirements. The blended tea is then packaged, either in tea bags or looseleaf tea packets. (Mohan et al., 2010)
On auction, the KTDA managed factories get the revenue to pay the farmers and the consumers
both local and global can buy the tea for consumption in various outlets. The factories,
therefore, must try to minimize their cost of production to maximize profits to ensure farmers
reap more benefits from the sale of their tea. Tea prices fluctuate from time depending on the
global production and demand, the quality and quantity produced.
10
2.3 BENEFITS OF TEA
Previous studies have shown that tea has the following benefits;
 Has antioxidant properties – Tea contains polyphenols an important oxidant required in
the body.
 Boost energy and focus- Tea contains caffeine that is a stimulant.
 Has antimicrobial properties- Tea helps improve gut health.
 May lower blood sugar levels and decreases the risk of cancer
2.4 ECONOMIC PROFITABILITY OF TEA IN KENYA
The reliable data shows the contribution to the national economy and its role in improving the
people’s living standards through improving their incomes through maximized tea profit. Tea
as a major cash crop and export contributes to 55% of the government total revenue through
exports. Tea plantations in Kenya cover almost 30% of the total hectares in the country. Tea
production forms an integral part of farming systems with longer lifecycles since once the tea
bushes mature only pruning will be done frequently and quick turnover.
Tea production in Kenya is characterized by high input systems which include a labour
intensive and fertilizers with output accessible at both levels. Tea is also characterized by large
tracts of land called Estates, highly labour intensive since plucking is both mechanical and hand
plucking. Large plantations especially in Kericho, Sotik, Nandi and Nyayo Tea Zones
Development Corporation while in areas where there are large population tea production is
mainly on a small scale. Tea production has been a major income for farmers and also offers
employment, in turn, uplifting livelihoods.
11
Compared to livestock production, tea production requires less attention and minimal
management practices and in the long run, profits obtained exceed those from livestock
production which is capital intensive. Tea rarely suffers from the incidences of pests and
diseases and has a comparative advantage since it has the ability to smoother weeds. Investment
in tea production offers quick and great returns though farmers are not cautioned to price
fluctuations.
The profitability of tea enterprises depends on clones used, climatic conditions and
management of the tea farm. The analysis of cost-returns structure in tea production will
facilitate appropriate knowledge of cost implications to obtain optimum economic benefits
from investment into the industry.
The tea sector is one of the profitable ventures which can help in tacking problems of
unemployment as evident in agriculture to improve the status of rural communities and bring
about rural development and rural transformation. However, prolonged drought and climate
change may negatively affect the growth of tea in turn affecting the production of high-quality
teas. The current price fluctuations and market conditions affect the producers who are the
major stakeholders. This can make them change and try to get into alternative enterprises.
2.5 MANAGEMENT OF TEA
2.5.1 Integrated Crop Management
Good Agricultural Practices (GAPS) in tea production.
Tea like any other crop requires proper management to increase production per bush and this
is in line with ensuring the crop is healthy and strong. Production per bush is a key performance
indicator that is encouraged to be more than 0.5 Kgs per bush and recommended management
practices are effected to improve this.
12
a) Selection of recommended clones
The choice of clones for different catchments is key since different catchments have different
environmental conditions that favor each. The clones which are most common in my area of
study are TRFK 31/8, SFS-150 and TRFK 301/6 Purple tea which is coming up well. The
selection of clones is therefore key in the productivity of green leaf.
b) Plucking management
Plucking standards are recommended to two leaves and a bud and maintenance of a good
plucking table. Fine or coarse plucking depends on the number of foliage and cutbacks during
plucking while hard or light plucking depends on the amount of new foliage left after plucking.
A good plucking table is therefore recommended and also pruning rounds determine the quality
of green leaf plucked.
c) Regular pruning
Pruning is a recommended practice and is done at different heights depending on the age of the
tea bushes to allow regeneration of the bushes. It is mostly done in months from July to
September. It also allows for easy weeding and application of fertilizer.
d) Bush hygiene
Tea bushes should be maintained clean by weeding in a bid to ensure high-quality green leaf
and minimize competition for nutrients. Tea weeding is mostly done manually.
13
e) Adequate fertilization
Tea has a long lifecycle and the soil gets depleted from time to time therefore there is a need
to replenish the soil to avoid any compromise on quality and quantity.
N.P.K 26.5.5 is recommended for topdressing and it’s done subsequently during the short rains
of October to allow uptake since during the long rains it's prone to leaching and being washed
off by runoff.
The recommended rate is 50 Kg bag of N.P.K for every 700 tea bushes per year. Well
decomposed farmyard manure can be applied at a rate of 20 Kgs for 15-20 bushes after pruning.
KTDA supplies farmers with fertilizer which is paid on due course of the year.
2.5.2 Integrated Pest and Disease Management
Integrated pest and disease management consist of physical, cultural, mechanical and
biological control methods. Chemical control methods should be used as a last resort since tea
quality is highly sensitive to chemicals. The presence of any chemicals can cause being banned
in the global markets.
Though diseases such as Armillaria root rot, Hypoxlyon wood rot, and Stem cancker are not
prevalent, the control is by uprooting the affected tea bushes and burning them. The areas where
infestation had occurred should be planted with Guatemala (Napier) grass to suppress the
causal agents
14
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
This chapter covers the study area, theoretical, analytical and conceptual framework, research
design, target population. Sampling frame, sample and sampling techniques, data collection
and instrument.
3.1 STUDY AREA; LARI SUB COUNTY
It is situated in Kiambu County and nears Aberdare Ranges and Kinare forest. Lari SubCounty tea growing areas are divided into Electoral zones.
The Catchment has 6 Electoral zones with 62 coded buying centers
1. Kagwe zone
4.Lower Nyanduma zone
2. Gachoire zone
5. Upper Nyanduma zone
3. Gatamaiyu zone
6. Gachika zone
3.2 THEORETICAL, CONCEPTUAL AND ANALYTICAL FRAMEWORK
3.2.1 Theoretical Framework
Based on Maslow’s theory of The Hierarchy of Needs, smallholder tea farmers will normally
struggle to achieve a need as in his model, biological and physiological needs air, food, drink,
shelter, warmth, and sleep are given the priority. The more acutely they feel the more willing
they are to work towards meeting that need. Maslow (1943) stated that people are motivated to
achieve certain needs. When one need is fulfilled a person seeks to fulfill the next one, and so
on. Smallholder tea farmers might want to fulfill their needs but their incomes limit them.
Therefore with better incomes, more needs can be met.
15
3.2.2 Analytical Framework
The objectives will be achieved through; Gross margin analysis.
Gross Margin (GM) of Smallholder tea enterprise.
In GM analysis the following definitions of main components are used (Bernard and Nix 1982)
GMi = GOi – TVCi
i.e.
GMi = GOi - Cj
PROFIT (∏) = GOi – VCi – FCi
Where:
GMi = Gross Margin for enterprise i
GOi = Gross value of output for enterprise i
VCi = Variable cost of enterprise i
Cj = Cost of input j
a) Variable Costs (VC): A variable cost is one that does change when the level of output
alters. For a cost to be regarded as a variable cost, it has to satisfy two criteria which are also
satisfied by the enterprise outputs. It should be specific to a single enterprise, hence attributed
to it should vary approximately in proportion to the size of the enterprise. In this study, the
variable costs will be labour and fertilizer costs.
b) Fixed Costs (FC): These are costs which once incurred generate a continuous flow of
service, whether they are used or not. Fixed costs as defined in gross margin analysis are two
types: those that are fixed e.g. rent and general overhead expenses which will remain the same
whatever enterprises are selected and indivisible or integral costs which will vary but only in
'steps' e.g. building, machinery depreciation.
16
To achieve the social economic and institutional factors descriptive surveying will be used
This will be achieved through regression analysis where tea production in yield in the Greenleaf
will be taken as the dependent variable and farm management besides other farm and household
characteristics will be taken as the independent variables.
The following linear regression model is specified
𝑌𝑡 = 𝛽0 + 𝛽1 𝐼 + 𝛽2 𝑆 + 𝛽3 𝐸 + 𝛽4 𝑀 + 𝛽5 𝐿 + µ
Where:
Y.t represents the dependent variable is green leaf yields in Kgs in year t.
Βo represents the intercept
I represents input costs for year t. Cost of labour and fertilizer together
S represents the Size of land in Acres.
E represents Extension services to the farmer will be taken as a dummy variable (with 1 if the
farmer has received any services and 2 if the farmer has not received extension services.)
M represents the market, the confidence and level of satisfaction with the market by KTDA it
will be taken as a dummy variable (with 1 if the farmer is satisfied and 2 if the farmer is not
satisfied with the market offered by KTDA.)
L represents the level of education of the farmer will be taken as a dummy variable (with 0 if
the received informal education and 1 if the farmer received any formal education.)
µ represents the random error term.
17
3.2.3 Conceptual Framework
The researcher adopted this type of framework to come up with a comprehensive overall idea
of how the following influences the performance of smallholder tea farmers in Lari SubCounty, Kiambu County. The literature review helped in the identification of four main
variables namely farmers' education levels, farm inputs, market and size of land. Legal and
policy frameworks as contained in the Tea Act and KTDA order paper are highlighted as
moderating variables. Weather conditions are mentioned as an extraneous variable. This helped
in developing the conceptual framework.
3.3 FACTORS AFFECTING TEA PRODUCTION
Various factors influencing the growth and productivity of tea. The factors can be positive or
negative.
3.3.1 Inadequate capital
Capital is essential in tea production in the purchase of tea transplants and payment of labour
since tea is a labour intensive enterprise.
3.3.2 Unpredictable climatic conditions
Unfavourable climate such as prolonged drought lowers the quality and quantity of green leaf
thus lowering the quality of processed tea.
3.3.3 Pest and diseases
Pests and diseases reduce the performance of tea plants. Diseases such as Armillaria root rot
and Hypoxylon spread and cause the death of tea bushes if not controlled they can eliminate a
large portion of tea bushes. The diseases are controlled by uprooting and burning of affected
tea bushes. Rodents such as moles and rats damage roots and lead to poor quality producing
tea bushes
18
3.3.4 Price fluctuations
Fluctuations in prices are major as a result of low rainfall leading to the low quantity of green
leaf to process in turn there has to be a balance between what the KTDA managed factory sells
eventually resulting in price fluctuations. This can, however, be controlled through government
intervention.
3.3.5 High cost of inputs
Labour and fertilizer are the most common inputs after the establishment of tea bushes. Though
there is the provision of subsidized fertilizer, labour to weed and prune is becoming costly.
3.3.6 Lack of marketing information
Marketing information is important though most farmers are not aware of emerging marketing
trends thus information asymmetry is evident. Farmers should be informed to give them
knowledge on the market demand.
3.3.7 Extension services
Extension services provided help farmers in management practices in tea and how to improve
quantity produced per bush per annum. This also allows the dissemination of any information
to the farmers since the TESA'S are a link between the KTDA managed factory and the farmers
therefore it’s prudent that the link is efficient.
3.3.8 Poor infrastructure
Poor access roads especially when it rains reduce tea quality since when they are inaccessible
they cause delays and lead to withering and fermentation of green leaf at the buying canters,
therefore, lowering quality.
19
Independent Variables
Dependent Variables
Performance of small
holder tea farmer
1. Production of green leaf
2.Weighted tea
3. Profitability
Acces & Cost of farm inputs
1. Labour
2. Fertilizer
Marketing for tea
1. Accessibility
2. Ease of marketing
MODERATING
VARIABLE
1. Government and
Legal Policies
Educational Level of farmers
1.On Farm Training
2.Basic Formal Training
3.Extension Services
2. Infrastructural
development
EXTRANEOUS
VARIABLE
1. Weather
conditions
Size of land
1. Size of land on tea farming
2. Number of tea bushes
Figure 3. 1: Conceptualizes how the identified independent variables relate to tea
production.
20
3.4 METHODS AND PROCEDURES OF DATA COLLECTION
3.4.1 Research Design
The study adopted a descriptive survey research design, it will be used for inquiring into socialeconomic factors influencing tea production by the smallholder tea farmer in Lari Sub- County.
This survey study assessed the stated variables and their influence on tea production. (Kombo
and Tromp, 2006) argues that survey design is appropriate for collecting, classifying,
analyzing, comparing and interpreting data. Both quantitative (numbers) and qualitative
(words) research methods can be used to complement each other (Mahotra 1993; Morgan 1988;
Perry 1988). The data collected by this design will be used to suggest interactions between the
variables of this survey study.
3.4.2 Target population
This study targets smallholder tea farmers delivering green leaf to Kagwe Tea Factory
Company Limited.
21
3.4.3 Sampling Procedure and Sample size determination
The sample size in this study was determined through an approach based on precision rate and
confidence level as recommended by. In this study, the researcher will obtain a sample using
the formula below.
𝑛=
𝑍𝑝𝑞
𝑒
Where: n = desired sample size
Z = the abscissa of the normal curve that cuts of an area α at the tails (1-α equals the desired
confidence level). The value for Z is found in statistical tables that contain the area under the
normal curve.
p= the estimated proportion of an attribute that is present in the population, assumed that the
population that exhibits variability in yields due to the socioeconomic factors is 50%
q=1-p,
e = is the desired level of precision
In this study, the researcher projects to use a confidence interval of 95%, p-value of 0.5
assuming the variability in the proportion of the population is 50%, q=0.5
An acceptable error (the precision) of +/- 10 %( e = 0.1). Z was 1.96 as per table area under the
normal curve for the required C.I of 95% and N is 6325 farmers.
𝑛=
(1.96)(0.5)(0.5)
= 96
(0.01)
Respondents will be selected 16 from each electoral zone using the random number tables.
22
3.4.4 Data Collection Instruments
This study will use a semi-structured questionnaire to collect data, it will be structured to
capture data critical to the respondents’ profile and research objectives.
3.4.5 Testing Validity of the Research Instrument
Validity, as noted by Robinson (2009), is the degree to which results obtained from the analysis
of the data represents the phenomenon under study. Validity is also the degree to which an
instrument measures what it's supposed to measure as noted by Kothari (2004). Through
consulting and discussing with the supervisor during questionnaire development the researcher
will ensure content validity. This will ensure that the tool in use covers all aspects of the domain
intended to measure and also ensure they are in appropriate proportion.
3.4.5 Testing Reliability of the Research Instrument
Reliability refers to a measure of the degree to which the research instruments yield consistent
results (Mugenda & Mugenda, 2003). In consultation with my supervisor, the questionnaire
will be reviewed and adjusted based on experience.
3.4.6 Data Collection Procedures
Data will be collected from the sampled respondents using a semi-structured questionnaire.
Before issuing the questionnaires, a research permit will be obtained from the University. Face
to face interview method will be employed to administer the questionnaire. This will allow the
respondents' to seek clarity, to ensure accurate data entry. Drop-in pick later method will also
be employed where the respondents' are committed and not in a position to participate in face
to face interviews.
23
3.5 Data Analysis and Presentation
The data collected will be coded, edited and tabulated. The analysis will be done using
descriptive through using Statistical Package for Social Sciences (SPSS Version 20) tool. Data
analysis will be done using descriptive and basic inferential statistical analysis. Simple and
multiple linear regression methods will also be used. Mean, standard deviation and percentages
will be generated. Qualitative and quantitative analyzed data will be integrated into one report.
24
3.6 BUDGET
No
ITEM
USAGE
Units
COST
TOTAL
/Quantity
PER
COST
UNIT
(KSh)
1
Proposal Writing
Loose-leaf pads
Proposal writing
4
80
Typing
Binding Expenses
2
320
1200
Proposal binding
40
15
600
Questionnaires
Data collection
384
5
1920
Travelling expenses
Delivering questionnaires
Data Collection Procedures
and
3000
Conducting
Interviews
Miscellaneous
3
2000
Project report writing
Binding project
100
25
10
1000
11,390
Total
26
3.7.1 WORK PLAN AND TIME FRAMES FOR THE RESEARCH PROPOSAL
MONTHS OF 2019
Weeks
OCT OCT
NOV
NOV NOV
01
03
04
02
Activities
Developing
a
concept
note
Reviewing concept note
adjustments
Proposal
development
Literature review
Proposal
Development
Research Methodology
Questionnaire
writing
and review
Budget writing
Proposal presentation
Compilation
&
Submission
27
05
NOV
06
DEC
DEC
DEC
07
08
09
3.7.2 WORK PLAN AND TIME FRAMES FOR THE RESEARCH PROJECT
MONTHS
OF DEC
JAN
JAN
FEB
FEB
MAR
MAR
APR
11&12
13&14
15&16
17&18
19&20
21&22
23&24
2020
Weeks
10
Activities
Data Collection
Data Compilation
Data Coding
Data Analysis
Results
and
Findings
Report Writing
Compilation
&
Presentation
28
REFERENCES
Hazarika, K. (2011). Changing Marketing Scenario for Indian Tea.International Journal of
trade, Economics and finance, 2(4), 285-287.
Ironkwe, M.O.& F.O. Ajayi,(2008) Assesment of the input of extension services on
production in Omuma Local Government Area, River State
: Global J Agric.Sci.,(1)234-256 Kagira, E.K., Kimani, S.W., & Githi, K. S. (2012)
Sustainable methods of addressing
challenges facing smallholder tea sector in Kenya: A supply management approach
Journal of Management and Sustainability, (2), 1-15.
Karanga, P.M., & Bwisa, H.M. (2014) Supply Chain Factors Influencing Small Scale Tea
Farmers’ Production in Abothuguchi West Division in Kenya. International Journal of
Academic Research in Business and Social Sciences, 4(9), 413.
Keraro, V., Mokamba. J., Chelugut, J., Kithitu, J., & Mbogo, P. (2012). Strategies of
enhancing effective management of tea factories in liberalized small holder sub-sector
in Kenya. Prime Journals of Business Administration and Management, 2(11), 736-745.
Kothari, C. (2004). Research Methodology, Methods, and Techniques. New Delphi:
International P Limited. Linking Practice and Policy in Eastern Africa. New York.
K.T.D.A Management Information System, Results on 2018/2019 Financial year-Press
statement release, Annual Report, and Financial Statements for The Year Ended June
30th 2019.
29
Loconto, A. (2012). Value chains and chains of values: Tracing Tanzanian tea. In Local
Agri-Food Systems in a Global World: Market, Social and Environmental
Challenges (Vol.195, No. 214, pp. 195-214). Cambridge Scholars Publishing in association
with GSE Research.
Mansingh, P., & Liby. T. Johnson. (2012). Comparative analysis of existing models of small
Centre for Development Studies.
McLeod, S. (2007). Maslow's hierarchy of needs. Simply Psychology, 1.
Mohan, S. (2010). Value Chain Upgrading for Competitiveness and Sustainability: A
Comparative Study of Tea Value Chains in Kenya, Sri Lanka, and Nepal.
Morrison, A., Pietrobelli, C., & Rabellotti, R. (2008). Global value chains and technological
capabilities: a framework to study learning and innovation in developing
countries. Oxford development studies, 36(1), 39-58.
Mugabira, M. I. (2017). Value chain competitiveness analysis: entrepreneurial behavioural
practices determining business success in Uganda's commercial sugar and forestry
industries (Doctoral dissertation, University of Cape Town).
Mugenda, O. M., & Mugenda, A. G. (2012). Research methods dictionary.
30
APPENDICES
APPENDIX 1: LETTER OF INTRODUCTION
KIMANI J GICHO
0700424696
The University Of Nairobi,
College of Agriculture and Veterinary Sciences
12/12/2019
The Factory Unit Manager,
Mr. F. W. Wamae
Kagwe Tea Factory,
P.O. Box, Githunguri
Dear Sir
REF: REQUEST FOR RESEARCH DATA ON ACADEMIC RESEARCH PROJECT
I am a student at The University of Nairobi currently pursuing a Bachelor’s Degree in
Agricultural Economics. In fulfilments of the requirements for the award of the above, I am
required to carry out a study and asses the socioeconomic and institutional factors affecting tea
production and profitability of smallholder farmers from your organization as the respondents.
I, therefore, wish to request for your authority and assistance to interview 96 smallholder tea
farmers 16 from each electoral zone, on issues related to my research topic and to collect data
through a structured questionnaire from 27th December 2019 to 17th January 2020.
All information obtained shall be used solely for academic purposes and shall only be shared
with the examiner. The information after analysis of the data will be treated with the utmost
confidentiality.
Your approval shall be highly appreciated.
Yours Faithfully
……………………….
KIMANI. J. GICHO
31
Appendix 2: QUESTIONNAIRE
Specimen letter to respondents
Dear respondent,
I am a student at The University of Nairobi pursuing a Bachelor’s Degree in Agricultural
Economics. I am researching on "Socio-economic Factors affecting the production and
profitability of tea. A case of Lari Sub-County." This questionnaire is aimed at eliciting
information, which will be useful in the above-mentioned research as a part of my degree.
You have been selected as one of the respondents in this study. The information supplied will
be used strictly for academic purposes only. All information given in this questionnaire will be
treated with the utmost confidentiality. We request for your honest responses.
Your cooperation will be highly appreciated.
Thank you.
Kimani Joseph Gicho
32
Section A: General information: Please tick appropriately
1. Date of interview………………………………………………………………………
2. Name of KTDA factory where you deliver your tea………………………………………
3. Respondent’s name (optional).........................................................................................
4. Please indicate your gender Male [
]
Female [
]
5. Please Indicate your age………………………………………………………………
6. Electoral zone;
(a) Kagwe zone
[
]
(b) Gachoire zone [
]
(c) Gatamaiyu zone [
]
(d) Lower Nyanduma zone
[
]
(e) Upper Nyanduma zone [
]
(f) Gachika zone
[
]
7. How many acres are you currently farming tea on …………………….
8. The number of tea bushes currently owned……………………
Section B: Farmer’s education level
1. Have you had a formal or informal education? ……………….
If formal what level did you reach if informal tick appropriately?
(a) Primary [
] (b) Secondary [
] (c) Tertiary [
] d) Informal [
]
2. Did you receive any visit from Tea Extension Service Assistants (Agricultural Officers) to
train you on tea production? Yes [
] No [
]
3. If yes, how many times were you trained last year? ………………………………
4. Have you attended Farmer Field School (FFS) since you started farming tea………………
5. How would you rate the number of annual training given to you? (1) Not enough [
(2) Enough [
] (3) More than enough [
] (4) Many [
]
]
6. What improvement would you like to see in the extension services?
…………………………………………………………………………………
Section C: Farm inputs used.
1. Do you apply fertilizer in your tea? Yes [
] No [
]
2. If yes, how many bags do you apply per year ……………………….
3. Is this amount of fertilizer enough for your tea farm? (a) Yes [
] (b) No [
4. Are you able to pay for this fertilizer? (a) Yes [
]
] (b) No [
5. Do you normally receive your tea fertilizer when you require it? (a) Yes [
]
] (b) No [
]
6. Do you pluck your tea or have you engaged/employed other people to pluck it for you?
…………………………………………………
33
7. If you pluck it for yourself how many days on average do you pluck per
month……………….
6. If you have engaged other people, how many people, per month, do you normally engage
to pluck your tea? .............................
7 On average how much do you pay per month for labour? ……………………………….
7. Is this labour enough for your farm? (a) Yes [
] (b) No [
]
8. Are you able to pay for your farm labour? (a) Yes [
] (b) No [
9. Do you get this labour when you require it? (a) Yes [
] (b) No [
]
]
Section D: Market for tea.
1. Did you deliver all your tea to the factory during the last twelve months? Yes [
] No [
]
2. If no, what made you not to deliver? (a) Factory did not collect [
] (b) I failed to deliver
[
] (c) Any other. [ ] Specify..............................................................................................
3. How many kilograms of tea did you deliver to the factory the last year (January- December)?
............................
4. How satisfied are you with (Tick one)
[a] Green leaf collection by the factory? (1)....... (2)…….
[b] Tea market? (1)…… (2)……
Key: 1= Satisfied
2= Dissatisfied.
Section C: Farm inputs used.
1. Do you apply fertilizer in your tea? Yes [
] No [
]
2. If yes, how many bags do you apply per year ……………………….
3. Is this amount of fertilizer enough for your tea farm? (a) Yes [
] (b) No [
4. Are you able to pay for this fertilizer? (a) Yes [
]
] (b) No [
5. Do you normally receive your tea fertilizer when you require it? (a) Yes [
]
] (b) No [
]
6. Do you pluck your tea or have you engaged/employed other people to pluck it for you?
…………………………………………………
7. If you pluck it for yourself how many days on average do you pluck per
month……………….
34