Time series analysis of Uganda’s agricultural sector tea production
from 2001-2021
Prepared by
Kyambadde Tonny
20/U/8928/PS
A dissertation submitted to the School of Statistics and Planning in
partial fulfilment of the requirements for the award of the degree of
Bachelors of Science Quantitative Economics of Makerere
University
October 2023
i
ii
DEDICATION
I dedicate this report to my beloved parents for the tremendous work and selfless services done
towards my academic work. Their encouragement, advice, financial support and devotion to my
endeavors have kept me striving for greater heights. May the Almighty God bless them.
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ACKNOWLOGMENT
I wish to extend my gratitude to the Almighty GOD for the gift of life and for enabling me to
study plus enabling me to complete my report successfully. I also wish to present my deep
heartfelt gratefulness to, my supervisor, for his time, guidance and direction throughout this
research project.
With sincere gratitude I also thank my friends and course mates for their tremendous support and
encouragement, without forgetting my Family most especially my Parents and that is my loving
and caring Dad Mr. James and Mum Mrs. Mpungu Lydia, Aunt Diana plus my brother Tito for
their Financial and Moral support through my education.
May God Bless you all.
iv
TABLE OF CONTENTS
DECLARATION ................................................................ Ошибка! Закладка не определена.
APPROVAL .................................................................................................................................... i
DEDICATION ............................................................................................................................... iii
ACKNOWLOGMENT .................................................................................................................. iv
ABSTRACT .................................................................................................................................... x
LIST OF ABBREVIATIONS AND ACROYMS ......................................................................... xi
CHAPTER ONE ............................................................................................................................. 1
BACK GROUND OF THE STUDY .......................................................................................... 1
1.1
Introduction ...................................................................................................................... 1
1.2 Problem Statement ................................................................................................................ 3
1.3 Objectives of the study.......................................................................................................... 3
1.3.1: Objectives ..................................................................................................................... 3
1.4 Significance of the Study .......................................................................................................... 4
1.5 Conceptual Framework ............................................................................................................. 4
CHAPTER TWO ............................................................................................................................ 5
LITERATURE REVIEW ............................................................................................................... 5
2.0. Introduction .............................................................................................................................. 5
2.1 Tea Production .......................................................................................................................... 5
2.2 Area ........................................................................................................................................... 6
2.3 Consumption ............................................................................................................................. 7
2.4 Marketing .................................................................................................................................. 7
CHAPTER THREE ...................................................................................................................... 10
RESEARCH METHODOLOGY.................................................................................................. 10
3.0: Introduction ........................................................................................................................ 10
v
3.1: Research design ................................................................................................................. 10
3.2: Study area and unit of analysis .......................................................................................... 10
3.3: Data source ........................................................................................................................ 10
3.4: Data analysis ...................................................................................................................... 10
3.4.1: Regression analysis ..................................................................................................... 11
3.4.2. Test statistic ................................................................................................................ 11
3.4.2.1: Sign test.................................................................................................................... 11
3.4.2.2: Turning point test ..................................................................................................... 12
3.4.3. Double exponential smoothing ................................................................................... 12
CHAPTER FOUR ......................................................................................................................... 14
PRESENTATION AND INTERPRETATION OF FINDINGS .................................................. 14
4.0: Introduction ........................................................................................................................ 14
4.1: Computation of the Test Statistic....................................................................................... 14
4.1.1: Testing using the sign test ........................................................................................... 15
4.1.2: Testing using turning point test .................................................................................. 16
4.2: Results from the Regression analysis ................................................................................ 16
4.2.1: Conclusion. ................................................................................................................. 17
4.3.0: Linear trend. ................................................................................................................ 17
4.3.1: Trend Interpretation. .................................................................................................. 17
4.4: Total output of tea .............................................................................................................. 18
CHAPTER FIVE ...................................................................................................................... 20
SUMMARY OF THE FINDINGS, CONCLUSION AND RECOMMENDATION .................. 20
5.1 Introduction ......................................................................................................................... 20
5.2 Summary of Findings .......................................................................................................... 20
5.3Conclusions .......................................................................................................................... 20
vi
5.4 Recommendations ............................................................................................................... 21
REFERENCES. ............................................................................................................................ 22
vii
LIST OF TABLES
Table 1 ...................................................................................................................................... 14
Table 2 ...................................................................................................................................... 15
Table3: ...................................................................................................................................... 16
Table 4 ...................................................................................................................................... 16
Table 5 ...................................................................................................................................... 18
Table 6 ............................................................................ Ошибка! Закладка не определена.
viii
LIST OF FIGURES
Figure 1 ........................................................................................................................................... 4
Figure 2 scatter plot ...................................................................................................................... 18
Figure 3 bar graph ......................................................................................................................... 20
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ABSTRACT
The primary objective of this research was to conduct a comprehensive time-series analysis of
tea production in Uganda's agricultural sector, focusing on the period from 2001 to 2021. The
study aimed to explore the statistical trends within Uganda's tea industry, with specific goals
including the examination of tea output variations over time, the development of a robust
forecasting model for production rates, and the identification of overarching trends and patterns
in tea production. The research methodology involved the utilization of secondary data sources,
with an emphasis on ensuring data validity and reliability through cross-verification from
multiple credible sources.
The empirical findings of the time series analysis confirmed a discernible upward trend in the
volume of tea production over the specified timeframe. Utilizing linear regression, the study
established a strong positive correlation between tea output and the passage of time (measured in
years). Building upon these findings, the study generated forecasts for the next six years,
predicting the anticipated volume of tea production.
Based on the research outcomes, several recommendations are proposed to enhance Uganda's tea
sub-sector. Firstly, the government is urged to address existing barriers hindering tea growers,
specifically through pricing interventions. Additionally, supportive measures for smallholder
producers should be implemented, coupled with increased resource allocation for the sub-sector.
Encouraging tea cultivation in new areas and expanding acreage in traditional tea regions is
advisable. Moreover, optimizing the use of agricultural inputs in both tea production and
processing is crucial. Standardizing the quality of tea at the farm level is recommended to
enhance the value of tea outputs and facilitate international market competitiveness.
Policy initiatives aimed at granting firms easier access to credit services, such as soft loans, and
promoting saving and investment habits are essential. These efforts will attract more
investments, leading to increased production. Furthermore, the government should ensure
sustainable market access for youth-led enterprises, provide appropriate skills training for young
individuals, and create an enabling environment that facilitates access to land and finance. These
steps are pivotal in realizing the full production potential within Uganda's tea sub-sector.
x
LIST OF ABBREVIATIONS AND ACROYMS
UBOS: Uganda Bureau of Statistics.
GDP: Growth Domestic Product.
UN: United Nation.
UGTA: Uganda Tea Development Authority.
FY: Financial Year.
MAAIF: Ministry of Agriculture, Animal Industry and Fisheries.
MAFAP: Monitoring African Food and Agricultural Policies.
MFEPD: Ministry of Finance, Planning and Economic Development.
IFAD: International Fund for Agricultural Development.
TAMTECO: Toro Mityana Tea Company.
STRP: Smallholder Tea Rehabilitation Project.
xi
CHAPTER ONE
BACK GROUND OF THE STUDY
1.1 Introduction
Agricultural sector has been and continues to be the most important sector in Uganda’s economy.
Uganda is consider to be among the best countries in Africa with a high agricultural potential
because of the low temperature variability, fertile soils, and two rainy seasons over a
year. Uganda produces a wide range of agricultural products including: coffee, tea, sugar,
livestock, fish, edible oils, cotton, tobacco, plantains, corn, beans, cassava, sweet potatoes,
millet, sorghum, and groundnuts. According to the UN’s Food and Agriculture Organization,
Uganda’s fertile agricultural land has the potential to feed 100 million plus people. In FY
2021/22, agriculture accounted for about 24.1% of GDP, and 33% of export earnings. The sector
contributes 43 per cent of the gross domestic product (GDP) and 85 per cent of national export
earnings. Over 80 % of Uganda's household depends on agriculture for their primary source of
income (national bureau of economic research in March 2010. According to UBOS about 70% of
Uganda’s working population is employed in agriculture. The agricultural sector is dominated by
food crop production, contributing 71 per cent of the agricultural GDP. According to (MAAIF
and MFEPD, 2000), Only one third of the food crop produced is marketed, implying that the
agricultural economy is still oriented towards subsistence production and about 48 per cent of the
rural population lives below the poverty line and 25% cannot even meet their daily food
requirements. Most literatures seem to conclude that investments in agriculture and rural
development, both private and public, stimulate economic growth and development.
According to IFAD (2013), good agricultural performance was very important in reducing
poverty and hunger rates in the more successful countries. Agricultural growth also has a high
poverty reduction pay-off than non-agricultural growth or investments. (World Bank, 2008). It is
observed that the sector growth is influenced by practices poor post-harvest handling, farmers’
limited use of fertilizer and quality seeds, and a lack of irrigation infrastructure – rendering
production vulnerable to climatic extremes and pest infestations, the lack of quality packaging
capabilities, insufficient storage facilities, shortage of agricultural credit, high freight costs, the
1
lack of all-weather feeder roads in rural areas, a complicated and inefficient land tenure system,
and limited knowledge of modern production practices.
According to MAFAP, tea is Uganda's third most important agricultural export earner after
coffee and fish. It is one of the commodities selected for the government strategic intervention
program for National Development aiming at promoting production, processing, marketing and
export of strategic commodities in the agricultural sector. Uganda is the third leading producer
and exporter of tea in Africa (45,000MT) after Kenya (295,000MT) and Malawi (55,000MT)
(MAAIF, 2010) but tea produced in Uganda is of a medium quality tea primarily used in blends
with premium quality teas, such as those from Kenya.Tea is consumed by the majority of
Ugandan population as hot beverage alone or with milk. The tea consumed domestically is either
branded by the respective processing factories or by private buyers who purchase the made tea
and brand it for local consumption. Small quantity of mostly branded imported specialty tea is
also sold in supermarkets. Currently, according to UBOS figures 2022, tea is the third
agricultural export earner in the country, earning over $85 million. In the economy, tea
contributes about 1.6% of Uganda's Gross Domestic Product and provides 11% of the national
employment.
According to Focus on Africa Journal (Ahmad Tea), tea was first cultivated in Uganda in the
early years of the 20th century in the botanical gardens in Entebbe, the capital. The crop was a
success and commercial cultivation of tea started in the 1920s and is one of Uganda's main
exports and is grown by both plantation companies and small holder farmers. Tea being an
important export product, the Government of Uganda considers it as one key area through which
the country’s export earnings could be boosted, and people’s social-economic conditions
improved.
The tea sub-sector was however greatly affected by the expulsion of the Asians by the President
of Uganda General Idi Amin Dada during the 1970's impeding tea production from 1974 to
1985. Tea production was boosted by the formation of the Toro and Mityana Tea Company,
TAMTECO by a British entrepreneur Mitchel Cotts in the early 1980's. During the last decade,
Uganda tea exports have been growing steadily by more than 40 percent from 30,477 ton in 2001
to 53,178 ton in 2010. Tea is now the third foreign exchange earner after coffee and fish and is
one of the crops under the strategic export program. The tea value chain in Uganda, generally
2
similar to tea value chains in other countries, is characterized by many producers but few
downstream players. About 70 per cent of Uganda’s tea is sold through auction in Mombasa, and
20 per cent through direct sales, while the remainder is sold locally.
1.2 Problem Statement
Despite the relatively high GDP growth achieved in Uganda in the last two decades, the farmers.
Uganda’s export earnings process therefore seems not to be broad based, decentralized and propoor as the problems of underemployment and agriculture and tea productivity have not grown
consistently. The tea sub-sector that employs about 11% and agricultural sector which employs
over 70% of the total workforce grew at a rate of only about 1% per annum in the same period,
and contributed less than 15% and tea production contributing about 1.6% of the total GDP
(UBOS, 2013). Tea production has not been able to transform itself to the degree envisioned, and
the producers most especially the small holders have remained poor and disadvantaged than
expected. This further poses a problem of low employment opportunities created by tea subsector and hence low livelihood among poverty continue to persist in the tea sub-sector. The role
that tea production can play to anchor economic development seems to be unresolved and
attracting little attention. It is upon the above problems that this study seeks to elicit the impact
of tea productivity on agricultural sector and economic development at large as a way to provide
knowledge that can make Uganda’s growth and development process more decentralized and
sustainable in order to enable a faster overall national economic transition and an ultimate
address of unemployment, poverty problems. The study will attempt to provide trend statistics
that show tea production, it will ascertain if tea productivity is among the major determinant of
inclusive growth in Uganda.
1.3 Objectives of the study
1.3.1: Objectives
The objectives of this study are: —

To investigate whether tea outputs rise overtime;

To come up with a reliable forecasting model to tea production rates;

To determine the trends and patterns in the general tea output.
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1.4 Significance of the Study
The findings of the study are targeted at helping agricultural sector on proper policy planning
and formulation regarding tea production resulting into future improvement in tea outputs and
the sector at large having identified the future trends and forecast.
The findings of the study would also assist majorly the surrounding developing countries to
properly plan or re-address their agricultural sector policies most especially about tea that would
help for their day-day management of the agricultural sector.
They would also act as a reference point of any researcher in setting the basis of his/her study.
1.5 Conceptual Framework
Conceptual framework showing relationship between the study variables
Independent Variables Intervening Variable
Dependent Variable
Factors
affecting
tea
production;
 Land size
 Labor employed
 Income from tea spent on
 Price fluctuations
Tea output
Government policies,
interventions
Producers’ actions
Figure 1
4
CHAPTER TWO
LITERATURE REVIEW
2.0. Introduction
In a developing country like Uganda, agriculture sector still remains the most popular sector
employing 80% of the workforce (Agri-ProFocus, 2013). This sector ranges from small
subsistence farming to highly commercialized agriculture. In Uganda agriculture is characterized
by a small scale non-cash crop growing, small scale bird and livestock keeping and a few cash
crop and small holdings of large scale birds and livestock. Subsistence agriculture. This refers to
self-sufficient farming practice, which involves the farmer growing and harvesting only enough
food in order to feed him/herself, as well as his/her family (Tony, 2007), Crops grown under this
include maize, beans, peas and animals like goats, sheep, and birds like doves and chicken grown
on small scale for non-sale uses Farmers may also sell-off a small proportion in exchange for
other family basic needs. This kind of agriculture is common in developing countries and this is
evident in large rural parts of Africa, Asia and Latin America. This practice is also very common
in densely populated countries like China and India. In Uganda particularly, crops grown under
this practice includes maize beans, peas, millet purposely for own use and often, a very small
portion of realized output is sold for other family basic needs. Commercial agriculture this refers
to a large scale production of crops and livestock keeping for sale, intended for widespread
distribution to wholesalers or retail outlets. (Tony, 2007) In commercial agriculture. Crops such
as maize, wheat, tea, coffee, sugar cane, cotton are grown, harvested and sold in the markets.
This agriculture also includes livestock production and livestock grazing for commercial
purposes. (Wharton, 1969). Tea is Uganda's third most important agricultural export earner after
coffee and fish. It is one of the commodities selected for the government strategic intervention
program for National Development aiming at promoting production, processing, marketing and
export of strategic commodities in the agricultural sector.
2.1 Tea Production
According to (MAAIF, 2010), in Africa, Uganda is the third leading producer and exporter of tea
(45,000MT) after Kenya (295,000MT) and Malawi (55,000MT). Tea produced in Uganda is of a
5
medium quality tea primarily used in blends with premium quality teas, such as those from
Kenya (MTTI, 2006). The crop is grown by large estates (46 percent of production) and small
growers organized as either small estates affiliated with particular tea factory or small scale out
growers producing 54 percent of the tea. Approximately the out growers produce 28 percent of
the total production of tea with the remaining 72 percent produced by the tea estates. Presently,
out growers have increased from 11,000 to 14,000 with tea growing expanded to Kabale in
western Uganda in 2008 (MAAIF, 2010). The current trend in Uganda is for growth in the
number of smallholders. Tea appears to be very attractive to smallholders providing work and
income throughout the year, requires little investment, and the risk of disastrous crop failure is
fairly low (Oxfam, 2002). The tea industry employs over 62,000 people, supporting more than
500,000 dependants in Uganda. The country has 12 tea processing and exporting companies
operating 21 processing factories (Bank of Uganda, 2011).
2.2 Area
According to UGTA report, 2012, tea covers an area of about 10 percent of the suitable fertile
land for tea estimated at over 200,000 ha countrywide. The favorable areas for tea growing
requires temperatures between 200 C- 250 C, annual average rainfall of between 1000mm and
1500mm for at least 150 days a year and altitude of over 1500m above the sea (MAAIF, 2007).
Some of the areas identified are in the districts of Kabarole, Bushenyi, Kanungu,Rukungiri,
Mityana, Kibaale, Hoima, Kisoro, Wakiso, Mbarara, and Nebbi /Zewu. Tea is largely grown
along the Lake Victoria Crescent and lower slopes of the Rwenzori Mountains as well as above
the Western Rift Valley. Tea production in Uganda has fluctuated considerably over time. In the
early 1970s, Uganda produced about 23,400 tons of tea from its 19,000 ha of with a productivity
exceeding 1.2 ton/ha. Since then, production began to decline rapidly to as low as 1,533 ton by
1980 and 3,500 ton in 1988 when the government began the implementation of the Smallholder
Tea Rehabilitation Project (STRP). Since then, the tea sector appears to slowly recover in terms
of production resulting primarily from increasingly rising productivity as area under tea
production is relatively stable. Production reached a record high of 25,900 metric tons in 1998,
surpassing for the first time the 1972 level of 23,400 metric tons. Production increased from
37,700 tons in 2005 to reach 48,663 tons in 2009 before declining to about 40,800 tons in 2010.
6
While this performance is commendable, the production must be seen from a national or global
perspective.
According to Uganda Tea Association (2012), about 200,000 hectares of land have been
identified as suitable for tea production in Uganda, but recorded tea area planted or under
production is only about 21,000 ha, which is only 10 percent of the reported potential area. In
terms of output, Uganda’s current levels compares poorly with neighboring Kenya with which it
started almost on the same comparative footing in the 1960s. Despite the success recovery of the
tea industry, there are a number of challenges facing the tea industry in Uganda including lack of
active tea research, increasing cost of energy, labor shortage, high cost of transportation to
Mombasa and the auction price fluctuations (Independent, 2010). Clearly these challenges lead
to inferior tea quality and consequently low export prices, high cost of production and price
uncertainty. These will erode profitability and incentives to producers and investors.
2.3 Consumption
Tea is consumed by the majority of Ugandan population as hot beverage alone or with milk. The
tea consumed domestically is either branded by the respective processing factories or by private
buyers who purchase the made tea and brand it for local consumption. Small quantity of mostly
branded imported specialty tea is also sold in supermarkets. Data on domestic consumption, i.e.
domestic production that is consumed domestically, of tea in Uganda is unavailable. However,
estimating domestic consumption of nationally produced tea as the difference between annual
production and export reveals that domestic consumption is only small fraction of total
production. On average (2000-2010), Ugandans consume about 3,000 tons of tea annually which
represents 7.5 percent of the average production.
2.4 Marketing
According to MAAIF and SPAAA report (2012), Tea is the third foreign exchange earner after
coffee and fish and is one of the crops under the strategic export program started in 2001/2.
Uganda is the third leading producer and exporter of tea in Africa after Kenya and Malawi.
Uganda’s share of tea exports on the global market is 2.8 percent and needs to increase to 5
percent (80,000MT). The percentage contribution of tea to total export earnings in 2009/10 stood
7
at 2.5 percent or US$70.9 million which was a 41 percent increment from US$ 50.2 million in
2008/09 (Bank of Uganda, 2011). In 2010, tea attained a market share of 4.2 percent of the total
export earnings, with a significant increase in export receipts estimated at US$ 68.3 million
(MAAIF, 2011). During the last decade, Uganda tea exports have been growing steadily by more
than 40 percent from 30,477 ton in 2001 to 53,178 ton in 2010. This growth trend is apparently
stimulated by the implementation of the liberalization policy reforms including the removal of
the Uganda Tea Authority monopoly on exports, valuation of export proceeds at the market
exchange rate and liberalization of export marketing. Ugandan tea is exported through the
Mombasa auction, which markets to worldwide destinations. Ugandan tea auctioned through
Mombasa is branded and re-exported as Kenyan tea according to Bank of Uganda (2011).
According to Tea Statistics Global Scenario report, Tea is one of the most popular and lowest
cost beverages in the world and consumed by a large number of people. Owing to its increasing
demand, tea is considered to be one of the major components of world beverage market. The
global market for hot beverages (coffee and tea) is forecasted to reach US$69.77 billion in value
and 10.57 million tons in volume terms by the year 2015 (GIA, 2011). Tea cultivation is
confined only to certain specific regions of the world due to specific requirements of climate and
soil. Majority of the tea producing countries are located in the continent of Asia where China,
India, Sri Lanka are the major producers. African tea growing countries are located mostly
around the tropical regions where Kenya, Malawi, Rwanda, Tanzania, Uganda are major
producers. Apart from these regions, some quantities of tea are also being produced in South
America (Argentina, Brazil and others), the Near East (Iran and Turkey) and the CIS (Russia and
Georgia). Globally, tea is cultivated in 36, 91,938 ha with an annual production of 4066596
thousand Kg (Anonymous, 2010). Over the years, both area and production has increased
substantially along with global trade of tea. Being an agricultural commodity whose production
is bound to fluctuate due to vagaries of nature, the prevailing differences between production and
demand is well below any reasonable limits. In this article, an attempt has been made to project
the global scenario of tea in terms of area, production, yield, export and import of tea over the
last two decades. Amongst tea producing countries, the principal producers are China, India, Sri
Lanka, Kenya and Indonesia. These five countries account for 77% of world production and 80%
global exports.
8
According to A Hicks- Au Jt, 2009, The Asian region produces a varied range of teas and this,
together with a reputation in the international markets for high quality, has resulted in Asia
enjoying a share of every importing market in the world. Africa, South America and the Near
East also produce quantities of tea. Huge populations of Asia, UK, EU, Middle East, Africa and
countries of the CIS consume tea regularly and throughout the day (Hicks 2001). The common
tea plant is the evergreen shrub, Camellia sinensis. There are several varieties of this species of
plant, a well-known one being the Indian Assam tea (C. sinensis var. assamica Kitamura).
Traditionally, tea is prepared from its dried young leaves and leaf buds, made into a beverage by
steeping the leaves in boiling water. China is credited with introducing tea to the world, though
the evergreen tea plant is in fact native to Southern China, North India, Myanmar and Cambodia
(Hicks 2001). Low-grown teas are produced from 0 to 600 m., mid-grown from 600 to 1200 m.,
while the high-grown teas are cultivated between 1,200-2,000 m. The mid-grown and the high
grown in some areas can be divided into “western” and “eastern” according to the location of the
estates. High-grown teas have a bright liquor and superb flavor. This superior quality is caused
by the cooler temperatures at these altitudes which induce slower growth than in the hot, moist,
low country. The seasonal monsoons, of course, also greatly affect the quality of tea (Anon.
1996; Hicks 2001). Although there are a growing number of countries that produce teas in a
multiplicity of blends, there are essentially three main types of Camellia tea, which are Green,
‘Oolong’ and Black. The difference lies in the ‘fermentation’, which actually refers to oxidative
and enzymatic changes within the tea leaves, during processing. Green tea is essentially
unfermented, Oolong tea is partially fermented and Black tea is fully fermented. Black tea,
which represents the majority of international trade, yields an amber coloured, full-flavor liquid
without bitterness (Hicks 2001).
9
CHAPTER THREE
RESEARCH METHODOLOGY
3.0: Introduction
This chapter presents the general methodology of the research that is study population, data
collection methods and tools and statistical analyses performed clearly explained.
3.1: Research design
Research design describes the procedures and methods for gathering and analyzing the required
information. This study uses quantitative research designs using already existing data about tea
outputs from the period 2001 to 2021. The quantitative research design aims at finding the
pattern and trend in the tea outputs, make forecast and predictions.
3.2: Study area and unit of analysis
The study was done in Uganda basing on the information collected from annual reports of
Uganda Tea Development Authority (UGTDA). The study’s unit of analysis was the total output
of tea produced in Metric-tones.
3.3: Data source
For this study, data was based on secondary data from UGTDA reports carried out by MAFAP,
UBOS and compiled by the ministry of. Data from published and unpublished government
documents, reports, journals, articles, newsletters, fact sheets was employed and provided
reliable information for the study.
3.4: Data analysis
Time series analysis about tea outputs data was mainly done in Microsoft EXCEL.
10
3.4.1: Regression analysis
The least square estimation of parameters method was used giving the estimates of the rate of
change of tea over the years (β) and error margin (ε)
The trend equation
𝑦 = 𝛼 + 𝛽𝑡𝑖 + 𝜀
For
𝛽 = ∑𝑦𝑡𝑖/∑𝑡𝑖 2 And 𝛼 = 𝑦 − 𝛽𝑡𝑖
Where
y - Represented output levels.
α - represented the exogenous time component variable.
3.4.2. Test statistic
3.4.2.1: Sign test
Once the signs of the first differences have been determined as done for the turning points test, a
sign test may be used i.e. assign a plus or minus to a period depending on whether its first
difference yt – yt-1 is positive or negative. A plus indicates that the series went up in the period
and minus implies that it went down.
The test statistic V = the number of positive first differences in the series.
Hypothesis
H0: The series is stationary
H1: The series is non-stationary or trended
Compute Z= (lV-µl)/s
Mean V: µ= n/2, n is the number of non-zero first differences.
Standard Deviation V: s= square root of n/4
11
3.4.2.2: Turning point test
The test statistic U = the number of turning points.
Hypothesis
H0: The output rates are not trended
H1: The output rates are trended
Compute Z = (lU-µl)/s
Mean U: µ= 2(n-2)/3
Standard Deviation U: s= square root (16n-29)/90
3.4.3. Double exponential smoothing
Here, initializing the value of the model is dependent on the implementation. The initial value is
computed by setting the first Lt to Yt, and the initial slope Tt is set to the differences between the
first two observations.
The model is given as
Yt+1 =Lt + (h) Tt-1
For
Lt = αYt + (1-α) (Lt-1 + Tt-1) and
Tt= β (Lt – Lt-1) + (1-β) Tt-1
Where
Yt+1 - the forecast value at time t+1
Lt - the level value at time t
Tt -the trend value at time t
α, β – the smoothing parameters
12
h – The forecast horizon.
13
CHAPTER FOUR
PRESENTATION AND INTERPRETATION OF FINDINGS
4.0: Introduction
This chapter presents the analysis and interpretation of the findings of the study.
4.1: Computation of the Test Statistic
Table 1
T
yt
yt-yt-1
0
33255
1
33789
+
2
36475
+
3
37018
+
4
37734
+
5
36726
-
6
44913
+
7
45978
+
8
50982
+
9
59449
+
10
62143
-
11
57939
-
14
Turning point
1
2
12
60970
+
13
65375
+
14
58558
-
15
39299
-
16
50055
+
17
74247
+
18
60337
-
19
75692
+
20
81675
+
3
4
5
6
Table1:
4.1.1: Testing using the sign test
From the above table; V=14
Mean V: µ = 20/2=10
√20
= 1.1180
4
Standard Deviation V: s =
Compute Z = 3.5778
Number of positive differences
14
Probability
3.5778
Z-value
1.96
Table 2
Since 3.5778 is greater than 1.96, the null hypothesis is rejected and a conclusion is drawn that,
output is trended at a 95 % level of significance.
15
4.1.2: Testing using turning point test
From the above table 1.0, U=6
Mean U: µ= 2(n-2)/3
Standard deviation U: s= square root (16n-29)/90
Z=( lU-µl)/s
Observations
21
Number of turning points
6
Probability
3.6097
Z-value
1.96
Table3:
Since 3.6097 is greater than 1.96, the null hypothesis is rejected and a conclusion is drawn that,
output is trended at a 95 % level of significance.
4.2: Results from the Regression analysis
Regression analysis was conducted mainly to find establish a suitable forecasting model for the
enrollment of secondary students.
Co-efficient.
Intercept
30459.5
R square
0.7117
Multiple R
0.8436
Adjusted R squared
0.6965
Time period
1988.3
Table 4
From above, the regression model therefore is given by
16
y = 30459.5 + 1988.3ti
4.2.1: Conclusion.
71% of the variation in output is explained by the variations in the time period (years).
There is a high positive correlation between the outputs and time period (years).
4.3.0: Linear trend.
A scatter plot was constructed to fit the linear trend of the total output over the years.
A scatter plot showing the total output of tea.
90000
Tea outputs in tons
80000
y = 1988.3x + 30459.5
R2 = 0.7117
70000
60000
Ряд1
50000
Линейная (Ряд1)
40000
30000
20000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Years since 2001-2021
Figure 2 scatter plot
4.3.1: Trend Interpretation.
When the time period is zero, the number of students enrolled will be 30459.5. An increase in the
number of years by 1 unit will increase the total output by 1988.3.
17
4.4: Total output of tea
According to the findings of the study, the total output of tea for the period 2001-2021 was
1098944 tons.
Year
Tea (tons)
2001
33255
2002
33789
2003
36475
2004
37018
2005
37734
2006
36726
2007
44913
2008
45978
2009
50982
2010
59449
2011
58444
2012
57939
2013
60976
2014
65373
2015
58588
2016
39299
2017
50055
2018
74247
2019
60337
2020
75692
2021
81675
Total
1098944
Table 5
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A bar graph showing total output tea.
A bar graph showing total output of tea from 2001-2021.
90000
80000
Total output of tea
70000
60000
50000
40000
30000
20000
10000
0
1
Years since 2001-2021
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Figure 3 bar graph
A table showing forecasted output for the period 2022 – 2027.
Year
Forecasted output
2022
83663
2023
85651
2024
87639
2025
89627
2026
91615
2027
93603
19
17
18
19
20
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CHAPTER FIVE
SUMMARY OF THE FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 Introduction
This chapter presents the summary of findings of the study, conclusions and recommendations
drawn from results presented in the previous chapter.
5.2 Summary of Findings
The study showed the annual total output growth rate was 1988 tons per year. According to the
analysis, total output was found to be with a positive trend indicating that output increased per
year from the year 2001 to 2021.
In 2015, the total output decreased by about 10% from 65373 tons in 2014 to 58588 tons in 2015
and a similar pattern was observed in the previous and subsequent years.
From the study, the implementation of the liberalization policy reforms in 1994 including the
removal of the Uganda Tea Authority monopoly on exports, valuation of export proceeds at the
market exchange rate and liberalization of export marketing highlighted reasonable success since
it gave confidence and freedom to tea producers indicated by the steady trend in the output.
5.3Conclusions
The total output is increasing with time which indicates that both domestic and export earnings
of a country are improving greatly and that the authority (UGTA) has registered a success.
Despite of the high tea production rates, considering the coffee case, the performance of the subsector is low. This is mainly due to; practices poor post-harvest handling, farmers’ limited use
of fertilizer and quality seeds, and a lack of irrigation infrastructure – rendering production
vulnerable to climatic extremes and pest infestations, the lack of quality packaging capabilities,
insufficient storage facilities, shortage of agricultural credit, high freight costs, the lack of allweather feeder roads in rural areas, a complicated and inefficient land tenure system, and limited
knowledge of modern production practices.
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5.4 Recommendations
The government should advance in its plan for liberalizing the economy and commercialization
of agriculture and adoption of policies geared towards increasing and diversifying exports, the
Government of Uganda may need to focus on ensuring that benefits from the recovery of the tea
sector trickle down to smallholder growers. While this is unlikely to be achieved through
regulations and direct interventions, among the measures to support smallholders includes
strengthening growers’ organizations and the establishment of institution to disseminate market
information and indicative price for producers similar to coffee.
The country should support tea growers through pricing interventions, the government may
consider some measures to support smallholder producers. This is especially important given that
potential expansion in tea production from these producers. Among the measures to support
smallholders includes strengthening growers organizations and the establishment of institution to
disseminate market information and indicative price for producers similar to Uganda Coffee
Development Authority. Improvement in rural transportation infrastructure and feeder roads will
reduce transportation costs and consequently may improve producers’ prices.
The government of Uganda should address the barriers to the tea sub-sector so as to attract
massive investments in the sector due to the incentives for investments leading to increased
outputs and the policymakers in line with the international benchmarks, should increase the
resource allocation for the sub-sector.
The government should also encourage tea production in new areas and expand acreage in
traditional coffee areas. Improve the use of agriculture inputs in tea production and processing
and to put a standard on the tea produced at farm level in order to increase the value of tea
outputs and exports on the international market and also come up with policies that support firms
to have more access to credit service such as soft loans, and also promote saving and investment
habit. This will lead to more investment and increase production further. The government should
ensure sustainable access to markets for youth-led enterprises and the right skills for young
individuals, while providing an enabling environment that fosters access to land and finance.
21
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