Relationship between Modes of Tea Plucking and Profit Margins in Finlays Tea Estates in Kenya

Abstract

Tea plucking constitutes a significant proportion of the total cost of production of tea. Hand plucking method has been the traditional mode of plucking but is becoming increasingly unpopular primarily because of its low productivity resulting in high plucking cost which translates to reduced profits. The ever escalating cost of production on tea estates has necessitated the adoption of alternative means of harvesting tea by use of special shears or plucking machines. These two methods are potential alternatives owing to increased productivity but their effects on yields and made tea quality hence prices casts doubt on their viability to increase profitability. This study formed the basis of establishing the relationship between mode of tea plucking and profit margins. The study focused on the nine tea estates ofFinlays (K) Ltd from the year 2008 to 2012. The study was conducted via well structured questionnaires to provide primary data. Permission was sought from the Finlays management to carry out this research and the confidentiality of the respondents will be assured by requesting that they do not indicate their names on the questionnaire. The Yamane's formula was used to sample respondents who were clustered into four functional group. A stratified systematic sampling technique was used to select respondents from the target population. Validity and reliability of the data was measured using Cronbach's alpha reliability coefficient. Data was analyzed using SPSS and descriptive statistical methods and presented using tables, graphs. The study showed that there was a significant relationship between the mode of plucking and profit margins. Mechanical tea plucking was found to be the most profitable followed by shear plucking. Hand plucking was the least in terms of profitability. These findings were largely attributed to the levels of productivity of each mode. Mechanical tea plucking and shear plucking modes if adopted translates to increased profitability and are recommended for adoption. The study is of importance to stakeholders and entrepreneurs seeking to understand tea business dynamics and means of improving cost effectiveness and market competitiveness.