Smallholder Agriculture is key to livelihoods of many rural households in developing and transition economies. In Kenya, small farms account for over 75% of total agricultural production and nearly 50% of the marketed output. Despite favourable trends in global development drivers such as rising population, per capita incomes and emerging urban dietary preferences, most smallholder farmers remain poor. This study sought to characterize agricultural commercialization trends, identify and prioritize constraints to participation in markets, analyse determinants of percentage of output sold, and explore strategies to promote market-oriented production. A participatory Rapid Rural Appraisal approach, household survey and a Truncated Regression model were used. A sample of 224 farmers: 76 of them growing maize, 77 involved in horticulture (kales and tomatoes) and 71 practising dairy, were interviewed in one peri-urban and one rural district (Kiambu and Kisii, respectively). Results show that in rural areas, lower levels of output are sold and fewer farmers participate in markets compared to the peri-urban areas. Opportunities for profitable commercial agriculture are observed in growing demand, emerging food preferences and intensive farming. At village-level, market participation is hampered by poor quality and high cost of inputs, high transportation costs, high market charges and unreliable market information. At the household-level, the determinants of percentage of output sold are producer prices, market information arrangement, output, distance to the market, share of non-farm income and gender. Strategies are suggested to improve rural input supply, institutional and regulatory framework, enhance value addition and strengthen market information provision.
Amyaz Moledina on 04 Sep 13The study uses Contingent Valuation Method (CVM) to elicit farmers' Willingness to Pay (WTP) for eliminating the risks of crop loss by accessing improved irrigation schemes. Data for the analysis were gathered using a double bounded survey from over 200 randomly-sampled farmers in 15 villages. The study makes a contribution to the applied welfare literature and should also be useful for policymakers in Africa. The policy contribution consists of valuation of improved irrigation in the presence of climate change risks. The applied welfare contribution consists of empirical evidence about the impact of farmer's risk aversion on welfare valuation. Pratt and Zeckhauser (1996) argue on conceptual grounds that in the absence of complete contingent claims market, individual WTP per unit of risk reduction will depend significantly on the level of risk and the magnitude of reduction that is offered. The present study captures individual farmer's risk exposure by constructing an index for farmers' expected rainfall. Since mean WTP is nonlinear in its parameters, mean WTP is computed based on the Krinsky and Robb (1986) method, which simulates the confidence interval and the achieved significance levels (ASL) for testing the null hypothesis that WTP≤0. The results show that farmers with lower expectations about future rainfall are willing to pay more for accessing the improved irrigation scheme. In addition, Mt. Kilimanjaro farmers are willing to pay up to 10% of their income to have access to improved irrigation canals. Assuming a 5% discount rate, the study found that farmers will reimburse the cost of building the irrigation scheme after 7 to 9 years.