SUPPLY RESPONSE OF TEA EXPORT TO LEVELS OF RAINFALL IN KENYA

Abstract

Tea export in Kenya has witnessed an ever ascending trend in metric tonnes but also depicted a volatile cyclic
character. This study looked into the causes of these fluctuating volumes and how the tea export supply
responds to rainfall. Time series data for years 1980 through 2015 was used. The autoregressive distributed
lag (ARDL) approach to cointegration employed here gives consistent estimates of supply response in
the presence of regressor endogeneity and also permits the estimation of distinct estimates of both long-run
and short-run elasticities when exogenous variables are not integrated of the same order. The
results from the study revealed the significance of rainfall in sustaining tea export supply in Kenya.