The Impact of exchange rates and inflation rate on the marketed returns to suppliers in the Kenyan tea industry

Abstract

Tea production and processing is a focal sector in the Kenyan agricultural sector with its' being the largest foreign exchange earner in the sector and thus a key contributor to the country's GDP. The tea sector is also a key employer with 150,000 Kenyans employed and a key income source with over 600,000 farmers. The Agriculture sector performed well from independence accounting for 40% of GDP in 1963. Its significance in the economy has been declining over time accounting for 27.3% of the country's GDP in the year 2014 (KNBS, 2015) however despite the decline in significance, the sector remains the leading contributor ofGDP in Kenya. Tea was the second leading export commodity earner of the country contributing 20.4% of total export value in 2014 (KNBS, 2015). Kenya is the largest exporter of tea by volume producing 32% of the world's tea exports volume in 2014 (Statista, 2015) and (Andae, 2015).