Expanding the Agricultural Finance Frontier: A Kenyan Case

Agriculture is the mainstay of the Kenyan Economy. However, agriculture has experienced low productivity over the years. Poor access to agricultural finance has been identified as a contributing factor to low crop productivity. Kenyan agriculture has undergone some fundamental changes which have profoundly affected agricultural financial services. In addition, most financiers shy away from lending to the agricultural sector because of the covariant risks related to rain-fed agriculture. Given this background, we undertake a comparative analysis of emerging models of agricultural finance that have expanded the agricultural finance frontier to the smallholder farmers. Key findings indicate that demand for farming credit takes the highest proportion of the credit needs among the rural households, thus accentuating the importance of agricultural finance. The state run model of agricultural financing has the lowest financial sustainability. On the contrary, the community financing models are the most likely drivers of change in the rural finance landscape.Agribusiness, Agricultural Finance, Community/Rural/Urban Development, Demand and Price Analysis, Farm Management, Financial Economics, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Institutional and Behavioral Economics, International Relations/Trade, Labor and Human Capital, Land Economics/Use, Marketing, Production Economics, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,

Increasing Kenya's Agricultural Competitiveness: Farm Level Issues

The objective of this paper is to address the farm level issues that affect the production costs and so the competitiveness of domestic food and commercial production. It compares domestic production prices of key food commodities with the equivalent parity prices to assess the extent to which the domestic prices for maize, wheat, and sugar, and export and domestic crops are competitive. This paper identifies and assesses the factors that influence domestic production costs. It also identifies strategies that could increase food and export crops’ productivity, by that reducing production costs and encourage competitiveness of the domestic production.Food Security, Food Policy, Kenya, Maize, Wheat, Sugar, Marketing, Q18,

Evolution of Kenya's Maize Marketing Systems in the Post-liberalization Era

The objectives of this paper are to: (1) identify the pattern of private sector investment in the maize marketing system since the reforms were initiated and evaluate the extent of private sector response to the reforms; (2) assess how maize prices and marketing margins have changed in response to the market reforms; (3) identify market-oriented mechanisms that have evolved in the current environment to reduce vulnerability of farmers, traders and consumers to price and expenditure instability; and (4) identify strategies that the government and private sector could implement to effectively promote the development of the evolving market oriented food systems.Food Security, Food Policy, Kenya, Maize, Crop Production/Industries, Marketing,

Factors Driving the Growth in Fertilizer Consumption in Kenya, 1990-2005: Sustaining the Momentum in Kenya and Lessons for Broader Replicability in Sub-Saharan Africa

The objective of this study is to identify the factors responsible for the impressive growth in fertilizer use in Kenya since market liberalization in the early 1990s. Over the past 10 years, fertilizer consumption has risen by 35%. So far, it is unknown whether smallholder farmers are responsible for this growth or whether it is being driven mainly by the large-scale and/or estate sectors. Moreover, it is important for policy makers to know whether the increased fertilizer consumption is being devoted to smallholder food crops or whether industrial crops such as tea and sugarcane are responsible for this growth. This study addresses these questions using nationwide survey data on smallholder fertilizer use patterns between 1996 and 2004. The study also explores whether the growth in fertilizer use in Kenya is attributed to any particular types of fertilizer delivery supply chains. A better understanding of the types of fertilizer distribution channels fueling the growth in consumption and the sustainability of these delivery systems can be of great help in guiding future policy to replicate successful supply chain models more widely in Kenya. Finally the study is meant to guide discussions on fertilizer marketing policy in Kenya in line with the new Economic Recovery Strategy (ERS).Food Security, Food Policy, Fertilizer Consumption, Kenya, Crop Production/Industries, Q18,

The Effects of Government Maize Marketing Policies on Maize Market Prices in Kenya

The Government of Kenya pursues maize marketing policy objectives through the National Cereals and Produce Board (NCPB) which procures and sells maize at administratively determined prices, and stores maize as a contingency against future shortages. A private sector marketing channel competes with the NCPB and prices in this channel are set by supply and demand forces. This paper estimates the effects of NCPB activities on the historical path of private sector maize market prices in Kenya between 1989 and 2004. Results provide important insights into the historical effects of the NCPB, and will provide useful input into deliberations on the appropriate role for the NCPB in the future. It was not possible to use a fully structural econometric model to estimate the historical policy effects because of data limitations in Kenya, which are typical of many developing countries. Instead we use a reduced form vector autoregression model (VAR) and show how policy simulation results can be obtained from a fairly parsimonious VAR that can be estimated with sparse data and imposes only minimal identification restrictions. Results show that NCPB activities have stabilized maize market prices in Kenya, reduced price levels in the early 1990s, and raised price levels by roughly 20 percent between 1995 and 2004. Because roughly 60 percent of Kenya's rural households purchase maize while less than 30 percent sell maize, the government's maize marketing board operations have transferred income from urban consumers and most small rural households to maize selling farmers.Kenya, income transfers, maize policy, price stabilization, VAR, International Development, C22, O2, Q13, Q18,

Interlinked Credit and Farm Intensification: Evidence from Kenya

This paper addresses the potential for interlinked credit/input/output marketing arrangements for cash crops to promote food crop intensification. Using panel survey data from Kenya, we estimate a household fixed-effects model of fertilizer use per hectare of food crops. Results indicate that households engaging in interlinked marketing programs for selected cash crops applied considerably more fertilizer on other crops (primarily cereals) not directly purchased by the cash crop trading firm. These findings suggest that, in addition to the direct stimulus that interlinked cash crop marketing arrangements can have on small farmer incomes, these institutional arrangements may provide spillover benefits for the productivity of farmers' other activities such as food cropping.Agricultural Finance,

Competitiveness of Kenyan and Ugandan Maize Production: Challenges for the Future

The purpose of this study is to assess the costs of maize production in Kenya and Uganda, starting from the fact that there is no single “cost of production” for maize. Cost of production varies according to region, the type of technology package employed, farmers’ management practices, and the weather. In light of this, the study disaggregates cost of production into seven region/technology categories, five in Kenya and two in eastern Uganda, in order to compare the relative competitiveness of maize among these regions and technology packages. Variations in cost of production within each region/technology category reflect differences in farmer management practices and micro-variability in soils and rainfall.Food Security, Food Policy, Kenya, Uganda, Maize Production, Crop Production/Industries, Q18,

Do Farmers Really Benefit from High Food Prices? Balancing Rural Interests in Kenya's Maize Pricing and Marketing Policy

Published by Tegemeo Institute for Agricultural Policy and Developmentfood security, food policy, Kenya, maize, Crop Production/Industries, Marketing, Q18,

Trends and Patterns in Fertilizer Use by Smallholder Farmers in Kenya, 1997-2007

This study uses nationwide household panel survey data from 1996/97 to 2006/07 to examine trends in fertilizer use on maize by smallholder maize growers. The paper also compares these findings with fertilizer use rates according to other recent surveys in Kenya to assess comparability. We also examine the correlation between household fertilizer use and indicators of welfare such as wealth and landholding size. In addition, we use econometric techniques applied to household survey data to identify the main household and community characteristics associated with fertilizer purchases. Lastly, the study considers alternative policy strategies for maintaining smallholders’ access to fertilizer in the current context of substantially higher world fertilizer prices.Fertilizer, Africa, Malawi, Kenya, Small Holders, Crop Production/Industries, Q13,

Effects of Agricultural Commercialization on Food Crop Input Use and Productivity in Kenya

Crop Production/Industries, Downloads July 2008 - July 2009: 23,