Objective Quality and Price Variation in Tea Marketing

Abstract

Tea sector is an important part of Kenya’s economy as a leading export earner. Kenya Tea Development Agency (KTDA) farmers’ earnings in bonus payment fluctuate based on variation in tea prices, however farmers in the West of rift valley under KTDA factories are paid less compared to East of rift valley and this disparity has caused economic difficulty. The purpose of the study was to investigate the relationship between objective quality and price variation in tea marketing. This was anchored on the quality dimensions’ framework. The study employed correlational research design with cluster and purposive sampling proceduresadopted to collect secondary and primary data. A sample of 7 factories representing 7 clusters with 69 tea factories was used to sample 2,142 invoices consisting of 19,890 panel data. The panel data was obtained using data extraction tool from secondary sources while primary data was obtained using questionnaires. The primary data utilized a census of 128 tea brokers, tea warehouses and buyers who handle tea in Mombasa tea Auction. Cronbach alpha obtained for objective quality were 0.895. Descriptive and inferential analysis was done using Microsoft Excel, SPSSand STATA. Panel multiple regression analysis was used to test research hypotheses at 5% significance level. The findings indicated that there is significant difference in objective quality of tea from East and West region (P<0.05)with quality of tea from KTDA factories in East better KTDA factories in West of rift valley. The study also found that objective quality had significant relationship with price variation. The study concluded that objective quality had significant relationship with price variation and supply had negative moderating effect on this relationship. The study recommended that KTDA factories and small scale farmersin West of rift valley should benchmark against KTDA factories in East of rift valley tea quality to improve quality of their tea.