Determinants of Exports of Agricultural Commodities in the World Markets: Case Study of Kenyan Tea
Abstract
Analysis of Kenyan export performance shows that the country has been able to expand
its export volume to compensate for losses due to deteriorating terms of trade or achieve
growth in real exchange rate.
Tea industry is playing an important role in the general export earnings. This export
Market is volatile and susceptible to many factors, some of which include policies of
importing countries vying for the same markets. Also on export market, tea is more
exposed to a strong competitive situation by other countries vying for the same market.
This paper is concerned with the factors affecting Tea export including an analysis of the
export trends. Export supply functions are specified and estimated for three countries,
United Kingdom, Pakistan and Egypt in addition to the overall total exports.
Two methods of analysis were employed in this study. Regression analysis was carried
out to find whether prices (price of tea and its substitutes, in this case coffee), Real
Exchange Rate and income of the consuming country affected tea exports and they did, to what extend.
Time series analysis was also employed to analyze the trends in tea exports.
The study utilized secondary information from Central Bureau of Statistics and
information from Tea Board of Kenya annual publications.
The results of the analysis attribute the slow-down of the tea Industry to a poor regulatory
framework that is not in harmony with privatizing the industry; poor processing and\ marketing services to farmers by the tea authority and conflicts and dissatisfaction among farmers.
Also the future growth in Tea exports will rely on the government intensifying efforts to
overcome the major bottlenecks in the industry. Maintenance of high quality standards of
the produce is paramount to the success of the industry
Citation
Master of Arts in EconomicsSponsorhip
University of NairobiPublisher
Department of Economics, University of Nairobi,