Minimum Tea Hectarage Hypothesis: The Case of Smallholder Tea Sub-Sector in Kenya

Abstract

Tea is planted in the high potential and prime lands in the humid and per-humid agro-ecological zones. The population pressure in the tea growing districts is relatively higher than that of the neighbouring districts without the enterprise. The average area under tea in the smallholder sub-sector is approximately 0.27 ha. The high population density in tea growing zones coupled with escalating unemployment in the country translates into continued sub-division of tea farms to smaller sizes. This scenario is an overt potential threat to the future of the smallholder tea production in Kenya. The problem of continued sub-division of tea farms has degenerated into what has conveniently been termed as \"uneconomic tea farm units\". The objective of this study was to determine the minimum significant tea hectarage a tea farmer should have below which it would be termed as \"uneconomic tea farm unit.\" A profit function model was fitted on 259 smallholder farms. The dependent variable was gross margin per farm per year. The independent variables were: number of tea bushes per farm per year, cost of fertilizer (Kshs.) per hectare per year, labour wage rate (Kshs.) per man-day per year in each farm and an hectarage dummy variable where D=1 for farms above a defined nominal farm size otherwise D=0. The regression analysis was done for every farm size hectarage in the whole sample. For each hectarage variable, the corresponding significance level of the hectarage dummy coefficient was recorded and their relationship summarised in a graph. The results indicated that farms with tea hectarage within 0.10 ≤ X ≤ 0.15 ha are more profitable. It was concluded that tea farm sizes falling within this range were economically efficient at all observed prices of the variable inputs, given the distribution of the fixed factors of production. It meant that tea farms sub-divided to sizes falling within this range are more profitable. The most optimal tea farm size was found at 0.13 ha. However, any tea farm with an area below 0.10 ha could conveniently be termed as \"uneconomic tea farm unit\". It implied that tea farms sub-divided to sizes below this hectarage would not be economically viable. The policy implication is that the minimum hectarage that an \"economic tea farm unit\" can have when farm subdivision is done to the limit should be 0.10 ha (approximately 0.25 acres). It is believed that subdividing tea farms below 0.10 ha would lead to uneconomical farm units which would ultimately result to a decline in national tea production. Policy makers within the tea industry can therefore conveniently draw the bottom line of tea farm subdivision at 0.10 ha. It would save the smallholder sub-sector from fragmenting tea farms to uneconomical sizes.

Journal of Agriculture, Science and Technology Vol.4(1) 2002: 1-14