The PESTLE dynamics in tea trade: Effects on return to the farmer and sustainability of the smallholder tea enterprise

Abstract

Tea plays an important role in Kenya as it contributes about 26% of foreign exchange earnings and supports approximately five million people. Since independence, the Tea Industry has experienced rapid growth in acreage under tea production and in both export volumes and incomes. The smallholder tea sub-sector accounts for about 60% of the Kenyan tea production. Despite this state, the cost of production has also been on the increase. However, even as the percentage return to the farmer by Kenya Tea Development Agency (KTDA) has been shown to be on the rise, it is not clear how the net earnings to the smallholder tea farmer has been affected by the various macroeconomic factors which incidentally are beyond her or his control and being determined by KTDA in what is essentially a monopolistic business environment, the PESTLE (Political, Economic, Social, Technological, Legal and Environmental) and the Marketing Mix (Product, Price, Promotion and Price). This paper explores the effect of the PESTLE factors on the return to the smallholder tea farmer and the sustainability of the smallholder tea enterprise in Kenya. The paper was informed by secondary tea sector data, field data obtained from smallholder tea farmers sampled from Mount Kenya region in Central Kenya, and interview reports from key tea sector stakeholders in Kenya. The paper indicates that the smallholder tea enterprise in the Mount Kenya region is facing eminent danger of collapse with farmers considering substitute/alternative farm use with higher rates of return on investment. The paper recommends strategies that are required to manipulate the PESTLE factors to the advantage of the smallholder tea enterprise and the sustainability of the Kenyan smallholder tea sub-sector.