Academic journal article European Journal of Sustainable Development

Institutional Innovations for Smallholder Agricultural Production Systems in Kenya: A Case of Smallholder Tea Subsector

Academic journal article European Journal of Sustainable Development

Institutional Innovations for Smallholder Agricultural Production Systems in Kenya: A Case of Smallholder Tea Subsector

Article excerpt

1.Introduction

Tea growing in Kenya has expanded rapidly since its introduction from India in 1903. Currently, Kenya is among the four leading tea producers; alongside China, India and Sri Lanka who collectively account for over 75% of the global tea production (TBK, 2010). According to the international tea statistics, Kenya is the leading exporter of black tea in the world and accounts for 25% and 8% of world tea exports and world tea production respectively (ITC, 2013).

The tea industry which is part of a larger agricultural sector in Kenya is currently one of the county's leading foreign exchange earners, with industry earning accounting for about 21% of the total export earnings. The industry also contributes about 4% of the country's gross domestic product (GDP) and offers an all-year-round employment to about 700,000 growers in the rural areas. In addition, the industry directly and indirectly supports over 3 million families (about 10% of Kenya's total population) making it one of the leading sources of livelihood in the country (Mwaura, et. al., 2008; Kagira et. al., 2012).

The Kenyan tea industry structure is characterized by a dual production system; comprising the large scale tea estates and the smallholder tea subsector. The management of the smallholder sub-sector is currently under KTDA Limited, a private limited liability company which is the successor to the Kenya Tea Development Authority, a state corporation which was privatized in the year 2000.The subsector has enjoyed considerable success since its inception in early 1960s as evidenced by the expansion in production and planted area.The planted area under the smallholder system, expanded from 2,522 hectares in 1962 to over 100,000 hectares in 2015. Currently, the tea sub sector produces about 66% of the industry production and is arguably one of the most successful smallholder schemes in the world (Monroy et al. 2012).

These marked successes, appear to overshadow myriad systemic challenges that the Kenya agricultural sector has endured over the years. Generally, the Kenya agricultural sector has undergone tumultuous periods that have seen a number of previously thriving subsectors collapse or left barely hanging on. This could in part, be explained by the diminished investment in the agricultural sector and generally near neglect of some enterprises in the aftermath of the structural adjustment programmes (SAPs) since the late 1990s(FAO, 2011; Heumesser and Schmid, 2012).In Kenya, various industries that were once thriving such as coffee, pyrethrum sisal and cotton have struggled to survive in the post liberalization era (van der Wal, 2008).While the smallholder tea subsector was not spared and was exposed to extensive market failures, following the withdrawal in levels of government investment and funding ((Dorward et al, 2004), the subsector has comparatively done well in managing its systemic constraints and challenges to remain competitive.This is evidenced by the notable increase in number of factories (60%) during post liberalization period, sustained productivity (figure 1) and the increase in the returns to the farmers from 60 per cent of gross tea sales in 2000 to an average of 75 percent in 2014.

In this paper we argue that while the relative success of subsector can be explained by the adoption of modern technologies, there are other relevant factors including policy and institutional contexts that have not been understood sufficiently to inform how KTDA has managed the systemic constraints and challenges to remain competitive. The sub-sector is serviced by among others the Kenya Tea research foundation (TRF) that develops important technologies which have largely been accepted by the farmers. This paper to provides an understanding of the institutional innovations and contexts on how smallholder tea farmers in Kenya have managed the systemic constraints and challenges to remain competitive. Specifically, the paper seeks to address three separate but interrelated research questions. …

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