Can Group Based Credit Uphold Smallholder Farmers Productivity and Reduce Poverty in Africa? Empirical Evidence from Kenya

With access to formal credit proving almost impossible to smallholder farmers, group based lending is steadily becoming popular in Africa. However, little is documented on the role of such programmes. In this paper, we employ propensity score matching and endogenous switching regime methods on a sample of 600 smallholder farmers drawn from two agricultural regions in Kenya in 2007. The goal of the survey was to evaluate the economic impact of group based credit programmes on smallholder farmers’ productive performance and poverty reduction in Kenya. Our findings reveal gains with significant impacts of group based credit on incomes in the range of 300 and 480 euros as well as via purchased inputs, with participation in such credit programmes significantly constrained by low literacy levels prevalent among a majority of rural farm households, influence of gender, with female headed households dominating in membership and little participation on the part of male headed households, poor rural access road infrastructure and constraints in group management resulting from lack of cohesion as the group grows in membership. These factors form the key recommendations for policy intervention to achieve sustainability of group based informal lending among farm households in Africa and other similar developing nations.Informal Micro-Finance, Smallholder Farmers, Performance in Kenya, Agricultural Finance, Community/Rural/Urban Development, Labor and Human Capital, Production Economics, Productivity Analysis,

What are the Key Constraints in Technical Efficiency of Smallholder Farmers in Africa? Empirical Evidence from Kenya

The idea that smallholder farmers are reasonably efficient has triggered much debate in Sub-Saharan Africa. Indeed, efficiency of smallholder farmers has implications for choice of development strategy; reason being that Sub-Saharan countries derive over 60% of their livelihoods from smallholder agriculture and rural economic activities. This paper evaluates factors that promote production efficiency among smallholder farmers in Kenya as avenues for policy intervention. A production frontier function was fitted to a random sample derived from a survey carried in 2007. Results show that all conventional inputs had the expected significance. On the inefficiency indicators, ownership to farmland, attendance to agricultural workshops, access to credit and participation in self-help groups significantly reduced inefficiency, while age, market distance, female gender and formal education increased inefficiency. Our findings suggest that within the available technologies, farmers can improve on their productivity if they nurture teamwork as in groups where labour is shared. Besides, better roads would reduce transaction costs and promote higher returns, and training in agriculture would boost efficient resources use for better performance. Therefore, there exists opportunity to improve efficiency in production given existing farm technologies.Technical Efficiency, Smallholder Farmers, Africa, Productivity Analysis,

Testing Market Integration for Fresh Pineapples in Kenya

This paper is based on a survey of thirty-one market actors from producing and consumption markets in Kenya. The data was collected through personal interviews. In analyzing integration of p ineapple markets we use Ravallion-type model. Results show that pineapple market in Kenya is oligopsonistic in nature with aspects of collusion amongst the urban middlemen and local market traders thus barring further entry by oth er potential actors. There was little market integration between urban markets and producing markets, and no integration between the rural producing markets. However, model results show that information flow between production and consumption markets significantly influence market integration, an indicator for efficiency in resource allocation and price transmission which is likely to result in lower transaction costs or higher profits to market actors. The paper recommends for policy intervention to promote information flow in the pineapple market chains as a strategy for improving rural incomes and encourage more market actors to enter and participate for efficiency in the marketing system.marketing Channel, Marketing efficiency, market integration, Crop Production/Industries, Marketing,

Determinants of Improved Maize Seed and Fertilizer Use in Kenya: Policy Implications

Maize is a key food crop in Kenya. While maize yields increased from 1.25 t ha-1 in early 1960s to over 2 tonnes in 1982, they fell below 1.5 t ha-1 in 2000. Given the limited land area, there is no doubt that Kenya will have to rely more on modern technologies for increased yields .Use of improved maize varieties and fertilizers will therefore continue to be critical inputs for improving productivity. To improve production, it is important to understand factors determining adoption and intensity of use of modern technologies. A stratified 2-stage sampling design was used to select 1800 households, subsequently interviewed by means of structured questionnaire. Econometric models were used to explore factors influencing adoption and intensity of use of the improved varieties and fertilizer. Access to credit was positively related to adoption and intensity of use of the two inputs. Extension contacts positively influenced the likelihood of adoption of improved maize seed, while amount of planting fertilizer used positively influenced both the adoption and intensity of use of improved varieties. Distance to market negatively determined the adoption and intensity of use of fertilizer. In addition gender and access to hired labour had negative impacts on the intensity of use of fertilizer. There is need to think of alternative sources of credit to farmers and also revamp the existing extension service (including privatization in the long term) for efficient delivery of information.Maize, adoption, improved seed, fertilizer, credit, extension, Kenya, Crop Production/Industries,

Is Value Addition in Honey a Panacea for Poverty Reduction in the ASAL in Africa? Empirical Evidence from Baringo District, Kenya

Using survey data from 110 randomly selected honey producers from two divisions in Baringo this paper analyzes the constraints and drivers of value addition in honey, an economic activity with a potential to improve household livelihoods but whose development has remained rudimentary. Baringo District undergoes frequent and prolonged drought that impacts on household livelihood assets. The livelihoods have traditionally been agro-based but due to variations in climatic conditions, crop production has been very low. Livestock production has also been adversely affected by these trends, leaving honey production as a viable alternative for smallholder farmers since it is less dependent on, or affected by climatic variations and is not resource intensive. This study uses Heckman two stage and the logistic regression models to determine the extent of value addition contingent on the decision of a honey producer to participate in value addition activity, and to assess the link between honey value addition and household poverty status, respectively. The results show that the decision to add value is positively and significantly influenced by the amount of honey harvested, group membership and amount of hours spent on off-farm activities, while it is negatively influenced the age of the farmers and the education level of the household head. Value addition contributes to the reduction of poverty through the improvement of household incomes. This paper concludes measures need to be put in place that would encourage and facilitate the practice of value addition if the welfare of the poor rural population is to be improved.value addition, poverty reduction, drought, ASAL, Africa, Livestock Production/Industries,

Milk Handling in the Supply Chains: The Case of Smallholder Retail Outlets In Nakuru, Kenya

This paper characterises smallholder milk outlets in Nakuru district one of the major milk producing Districts in Kenya, and also analyses factors that influence their current operating and handling capacities. Data comes from four divisions of the district. A sample of 137 smallholder milk retail outlets was made using systematic random sampling methodology. Both descriptive and ordinary regression methods were used in the analysis. A characterisation of the retail outlets is brought out and the factors that affect their current operating capacities presented. Results show that a unit change in education, experience and selling prices leads to 0.29, 0.18 and 0.23 significant changes in milk handling capacities by the retail outlets respectively. These imply that there is an efficiency gain from education and better prices through higher consumer incomes in the industry. Enhancement of milk retailers' value addition through provision of physical facilities such as cooling equipment and stability in prices should be encouraged through policy intervention to promote informal sector investments in the sub-sector.milk supply chain, smallholder retail outlets, Kenya, Industrial Organization, Marketing,

Market Liberalization and Agricultural Intensification in Kenya (1992-2002)

This study analyses the impact of the liberalization on the intensification of maize production in Kenya. It first analyses the impact of liberalization on input and output prices, followed by an analysis of farmer practices comparing two major farmer surveys, from 1992 and 2002. The results show that liberalization has had a general positive impact on the evolution of prices, with a decrease of input/output price ratios. However, fluctuations of maize prices has become very high and, combined with a decrease of marketing by the marketing board, has increased the uncertainty in maize production. The liberalization has also resulted in a decrease in extension services. Fortunately, farmers have an increased access to credit services. The combined effect of prices and access to services has resulted in little change in the number of farmers using new maize technologies, in particular improved varieties and fertilizer. The dose of fertilizer per ha has, however, decreased. As a result, yields have not increased. The analysis also showed that credit and extension have a major effect on adoption and, indirectly, on yield. The results indicate that an effort is needed to improve extension access. While the improved access to credit is encouraging, more than half the farmers still miss this essential service. Finally, the increased price fluctuation and market uncertainty should be addressed through improved use of price buffer mechanisms. Market access can also substantially be improved through investment in infrastructure.liberalization, intensification, adoption, maize, Africa, International Development, International Relations/Trade,

Does Land Use Patterns Matter for Bt-Maize: The Case of Maize Farming System in Kenya

Population pressures and the need to optimize the use of limited available land has led to increasing cropping affluence levels within the maize agro-ecologies in Kenya, and a shift from large to smallholder intensification and multiple cropping patterns. Using a geographic information system, this study relates cropping patterns, by area share, maize productivity and household incomes across maize agro-ecologies, with the purpose to establish a decision support system for optimizing land allocation and in priority setting for introduction of new technologies such as Bt maize varieties. Results show that land use patterns and maize productivity in maize farming systems differ between agroecological zones. The high potential areas experience high maize yields, with maize grown alongside major cash crops such as tea and coffee. In contrast, lowland coastal strip and lake Victoria region tend to grow drought tolerant tuber crops (such as cassava and sweet potatoes) alongside maize in appreciable land sizes. Similarly the dry areas grow drought tolerant legumes such as pigeon pea alongside maize. These low potential areas thus concentrate on meeting their subsistence food self-sufficiency needs, pointing at risk management strategies against drought and pests such as stem borer, unlike high potential areas with high value cash crops. Maize breeders should therefore consider insertion of Bt- genes in maize varieties that would achieve high production and which are also capable of safely growing side by side with crops that meet different food security conditions in different agro-ecological zones in Kenya.Land use, Smallholders, Maize production, Food security, Kenya, Crop Production/Industries, Land Economics/Use,

Is Cassava Commercialization a Strategy for Improving Household Income of Smallholder Farmers in Kenya? Endogenous Switching Model Approach

Improving the economic welfare of smallholder farmers through agricultural commercialization strategy has been of great concern in sub-Saharan Africa. This is especially so in the Arid and Semi-Arid (ASAL) areas of Kenya which are prone to drought and poverty challenges. Among the few crops that can thrive in these areas and be used in commercialization is cassava. Therefore this study purposed to evaluate the effect of cassava commercialization on household income among smallholder farmers in Siaya County, Kenya. A multistage sample of 181 households was obtained. An econometric analysis based on endogenous switching regression model was performed. The study found that farmers who undertook cassava commercialization had a significant higher income relative to those who did not. In addition, several factors were found to significantly affect commercialization. These included farm size, years of education and remittances which positively (p<0.05) influenced cassava commercialization and group membership (P<0.10). However distance to the market (p<0.01) had a negative effect. The study recommends that cassava commercialization should be enhanced in the region through various interventions by key stakeholders. These include providing farmers with high yielding cassava varieties, promoting value addition of cassava and upgrading rural road networks to facilitate easy movement of actors and products to markets. Keywords: Commercialization, Cassava, Strategy, Household income, Smallholder farme

Hedonic Analysis of Edible Winged Termites Prices in Kenya

This paper determines consumers’ socioeconomic, institutional and termites’ characteristics influencing the determination of Edible Winged Termites (EWT) market prices in Kenya. The multistage sampling procedure was used to select 384 rural and urban consumers who were interviewed using a pre-tested semi-structured questionnaire. Data were analyzed using Hedonic price analysis model. Results indicate that consumers’ willingness to pay was influenced by off-farm activities and place of residence for raw, fried, sun-dried and blanched; kiosk for raw, fried and sun-dried; time taken walking to nearest market for fried, sun-dried and blanched; education, income, group membership and culture for fried and sun-dried; age and producers for raw; nutritional officer for fried and termites attributes for sun-dried. This study concludes that: consumers’ participation in off-farm income generating activities and place of residence are the major determinants of EWT market price variations. The study recommends enhancement of EWT value addition to attract higher market prices hence profits. Keywords: Edible winged termites, Willingness to Pay, Rural, Urban, Hedonic price model