Abstract:
Tea growers in KTDA Zone 9 have been complaining with regards to green leaves payout differential
received at the end of every year with majority blaming the factories for under payment. They also receive low
payouts, poor extension services, limited market channels, limited credit facilities all of which are blamed on low
green leaves payout. Therefore there was need to establish the effect of production cost on second payout
differentials of green tea leaves among Kenya Tea Development Agency Managed Factories in Zone 9. A cross
sectional research design was used in this study. The target population of the study was 86 respondents who were
56 factory management staff, 19 directors and 11 Office staff. Primary data was collected using a structured
questionnaire which was pretested using 16 employees of KTDA Zone 8 managed factories and the results was
analyzed using Cronbach Alpha where a coefficient of 0.827 was achieved meaning that the instrument was
reliable. Content validity of the research instrument was actualized by having marketing expert and the research
supervisor scrutinizes the instrument and their comments included in the final data collection instrument.
Descriptive statistics were expressed inform of frequencies and percentages while inferential statistics were
expressed in form of regression coefficient. The study recommends that there is need for the KTDA managed
factories to explore on other alternative sources of power for instance hydro power which is relatively cheaper.
There is need also to procure their firewood land to reduce on the high rising cost of firewood fuel. Outsource
transport services which are usually costly to the factories to maintain will go a long way in ensuring that KTDA
managed factories reduces on tea production cost hence increase of payout to farmers.
Keywords: Payout differentials, Cost of Production.
