| dc.description.abstract | The tea industry remains vital for export earnings, employment creation and GDP growth.
These processors, however, are experiencing a persistent rise in their cost of production.
They have pursued sustainability initiatives to scale down production costs. However, the
outcome of such initiatives has not been measured. This study thus sought to determine
the sustainability of the small-scale tea processors in Kenya. A pragmatic paradigm
research philosophy was adopted. All the 54 factories were considered for the study.
Primary data entailed interviews with Key Informants. Secondary data was obtained from
factory documents and reports, peer-reviewed publications and grey literature. Data
Envelopment Analysis was used to compute the environmental efficiency scores. Tobit
regression was applied to determine the influential factors of firm variation in
environmental efficiency. Stochastic Frontier Analysis was used to determine the
technical efficiency scores, as well as determinants in a one-step estimation equation. A
Meta-technical efficiency method was used to establish regional efficiency estimates.
Finally, Emergy methodology was used to assess the ecological/economic sustainability
of these processors. In sum, the thesis contributes to both literature and methodology.
Results showed that the tea processors were environmentally inefficient, recording a mean
efficiency index of only 49%. Factories have the ability, therefore, to reduce 51% of
detrimental environmental inputs without compromising output. Fortunately, efficiency
was on an upward trajectory, rising from 29.4% in 2014 to 36.8% in 2016. Further,
environmental efficiency affected the profitability of these processors. Results showed a
negative effect of environmental efficiency on profitability. Worth noting, 81.3% of
factories that had good environmental performance (0.8-1.0) had low profitability,
ranging from -0.25% to 1.23%. Factories that were environmentally efficient had a 0.7%
lower chance of being profitable. For the second objective, the technical efficiency level
derived from the regional frontier was 76%, while that from the meta-frontier was 74%.
The technological gap ratio was 97%. Thus, input costs could be reduced by 24% without
compromising the potential output. The overall persistent inefficiency for the pooled
sample was about 20%, with a residual inefficiency of about 5%. This implies that
structural and managerial aspects were involved in the greater inefficiency of the smallscale
tea processors. No significant relationship between technical efficiency and
profitability was observed. For the third objective, the total Emergy for the purchased
non-renewable resources was 93.4%, purchased renewable resources registered 6.3%, and
renewable resource was 0.3%. Results showed that the small-scale tea processors relied
heavily on purchased non-renewable resources, hence rendering the processing subsystem
ecologically/economically unsustainable. The results further showed that the
small-scale tea processing sub-systems were profitable, with an average economic
output/input ratio of about 2.5. The policy implication of these findings is that the
government should offer incentives for the adoption of improved environmental
technologies. For example, offering a tax subsidy for new technologies adopted should be
considered. For the small-scale tea processors’ management, they should seek alternative
sources of finance that are cheaper or negotiate for better terms of borrowing with the
financiers. In addition, the processors might consider automating some factory processes
and incorporate the use of renewable energies, for example, solar power and gasifiers.
Further, they may consider issuing a green instrument that simultaneously reduces the
cost of capital and ecological impact. | en_US |
