Kenya Smallholder Coffee and Tea: Divergent Trends Following Liberalization
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Figure 8.6 Real Export Prices
constant 2005 K Sh/kg
600 500 400 300 200 100
05 20
00 20
95 19
90 19
85 19
19
80
0
year coffee
tea
Sources: Kenya National Bureau of Statistics; Economic Surveys, various issues.
coffee estates were large in number, but small in size, and lacked the expertise or influence to guide policy.
Reasons for the Divergent Trends Although there were many reasons why smallholder tea boomed and coffee collapsed after liberalization began in 1992, primary among these were the government’s policy of reform and its implementation, the dependence of coffee smallholders on cooperatives to process and market their coffee while tea smallholders were managed by the KTDA, and the role and performance of the crop boards. Other factors were also important, but not significant enough, in themselves, to have led to the wide divergence that emerged after liberalization. These other factors included a less favorable global economic environment for coffee than for tea, the greater problem of disease in coffee than in tea, and the large debt burden of the smallholder coffee sector following expansion in the late 1980s. Government policy toward the two sectors and the implementation of these policies were significantly different. The policy differences began in 1971, when the Coffee Marketing Board and the Coffee Board were merged into the CBK and given the dual role of regulation and marketing. This created a conflict of interest that remained until legislation separated these functions in 2005. In contrast, the KTB did not directly engage in