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Abstract

This paper evaluated farmers willingness to pay for irrigated maize production using field level data collected through a cross sectional survey. The results showed that 78% of the farmers were willing to pay more than the men willingness to pay of 3,082. This was above the average payment that farmers were making. It was also noted that willingness to pay increased with increase in irrigation rates. Labour, tail end farms, and enforcement of scheme level rules and regulations will enhance willingness to pay. Efficient factor use is an important factor influencing the amount paid for irrigation. Although the economic value of water was found to be greater than the willingness to pay implying that irrigated maize production is sustainable, irrigation services in Kenya are highly subsidized by the government. We therefore recommend farmer training, empowering water user associations to help enforce irrigation management processes as a way of enhancing farmers’ willingness to pay. On sustainability of irrigated maize production, we recommend that market forces be allowed to establish the price of irrigation services.

Keywords: Willingness to pay, Irrigation, maize, food security, sustainability

 Working Paper 64 - Farmers Willingness to Pay and the Sustainability of Irrigated Maize Production in Rural Kenya 

Working paper 14 - Preparation of an Inventory of Research Work Undertaken in Agricultural / Rural Sector in Kenya

Author(s):  Nyoro, James; Ariga, Joshua

 

Introduction

Kenya’s economy continued to perform below its potential during the 1990s. Since 1997, growth has averaged only 1.3%, consistently below the rate of population increase estimated at 2.4% per annum. Consequently, per capita income in constant 1992 prices has declined from US$271 in 1990 to US$239 in 2002. In addition, agricultural productivity has been on the decline, competitiveness eroded and international financial support diminished. During this period, poverty and food insecurity have increased.

This poor performance corresponds with the time when the economy has been undergoing major transformations. Wide-ranging trade and macro-economic policies that impact on production costs, incentive structures, and the competitiveness of different sectors are at various stages of implementation. At the same time, regionalization and globalization have exposed domestic production and trade to fierce regional and international competition. One outcome of these changes has been lower and more volatile prices for key commodities.

Reasons for the weak economic performance and high incidence of poverty include the persistence of pervasive governance failures, the slow pace of economic reforms, low savings and investment, a weak banking system, intermittent shortages and rising energy costs, and poor physical and telecommunication infrastructure, together with an inward looking trade regime that has protected industries from international competition. The continued high fertility rate and the burden of disease — particularly HIV/AIDS, where the infection rate reached 13.5% of the adult population in 2000, and malaria — are also contributing to the slow growth rate by keeping the dependency ratio high.

The performance of Kenya’s agricultural sector during this period generally mirrored the poor performance of the economy. Agriculture grew at a rate of 4.7 percent between 1963 and 1975 largely due to area expansion and increases in yields following the adoption of high yielding maize and wheat varieties and agronomic research in tea and coffee. This period was also characterized by the rapid growth of the sector fuelled by heavy government expenditure and donor involvement in provision of subsidized services and inputs.

Agricultural growth rate dropped between 1976 and 1980 due to various factors including the oil shocks of 1973 and 1979 and fluctuations in international commodity prices of key agricultural exports like coffee and tea. The growth rate has since then been on a declining trend to the extent that it was about –2.4 percent in 2000, - 1.2% in 2001, and 0.7% in 2002. During 2003, agriculture grew by 1.5%, Average annual agricultural GDP growth therefore fell from 3.5 percent during the 1980s to 1.0 percent during the 1990s and has remained below 2% since 2000.

Consequently, the proportion of the population living in poverty rose from 48.8% in 1990 to 51.4% in 1997, 55.4% in 2001, and is estimated to have increased further to 56% in 2003. Majority of the poor households cannot adequately meet their needs such as health, education, housing, food security or income generating activities. The Millennium Development Goal objective of cutting the proportion of Kenyans living in poverty in 1990 by half by 2015 therefore appears unlikely to be achieved.

External factors such as declining global agricultural commodity prices and vulnerability to climatic shocks explain part but not the entire decline. Domestic policy shortcomings created distortions in input and output markets and inadequacies in the legal and regulatory framework raised the cost of doing business. The poor state of infrastructure has led to increases in marketing costs. High incidence of HIV/AIDS has contributed to reduce labor productivity and a dysfunctional public support services system slowed the renewal of agricultural technology. The end result has been increased rural poverty and food insecurity, decline in competitiveness, and reduction in both private and public investment in the agricultural sector.

Partly because of the expected improved policy environment under the new government, elected in December 2002, the potential for economic growth is considered greater than the poor performance of the 1990s suggests. Although the new government inherited a weak fiscal position, strong monetary management in the 1990s produced low inflation and a stable exchange rate. The government has launched two policy documents to resuscitate the economy; the Economic Recovery Strategy for Wealth and Employment Creation (ERSWEC – June 2003) and the Strategy for the Revitalization of Agriculture (SRA – March 2004); the latter is a policy document aimed at transforming agriculture into a profitable commercial activity capable of attracting private sector investment and providing gainful employment to the population. The strategy identifies key factors that continue to hamper growth of agriculture.

The main objective of SRA is “to provide a policy and institutional environment that is conducive to increasing agricultural productivity, promoting investments, encouraging private sector involvement in agricultural enterprises and agribusiness.” This process, and the ensuing reforms, will need to be informed and guided by well-grounded analysis of policy options in terms of their economic and social implications. The poor performance of the economy and the development of the various national policy documents for reviving the economy have taken place against a background of various political and economic transformations. Over time, the country has developed a large volume of analytical and empirical work already done or ongoing on various policy issues of concern in Kenya’s rural and agriculture sector. At the local level, organizations such as Tegemeo Institute, Kenya Institute of Public Policy Research Analysis (KIPPRA), Institute of Policy Analysis (IPAR), Egerton University, African Economic Research Consortium (AERC), Institute of Development Studies (IDS), and University of Nairobi’s Department of Agricultural Economics have conducted various studies on policies in the country’s rural and agricultural sector.

At the regional level, ASARECA and ECAPAPA have contributed to the stock of knowledge on policy and strategy formulation on the region including Kenya. The International Livestock Research Institute (ILRI), the International Centre for Research in Agro Forestry (ICRAF) or the World Agro forestry Centre has also made contributions at the international level. Non Governmental Organizations (NGOs) and the donor community, either directly through consultant or indirectly by working with the policy research institutes, have also been involved in policy research and analytical work in rural development in Kenya.

Much of this large volume of analytical and empirical work however, remains scattered and unknown not only to policy makers but also to other would-be users. Consequently, there is need to synthesis these analytical and empirical input to benefit policy and strategy formulation and other users in rural and agricultural sectors of the economy. It is also important to take stock of the knowledge base that already exists so as to avoid duplication and identify areas where more work is needed to fill the gaps. In Kenya, the large volume of analytical and empirical work that has been done is not widely/readily available to existing and potential users. The existing gaps are not well defined to assist in the formulation of further policy research areas to support implementation of various government strategies, programs and projects.

The objective of this study is therefore to take stock or review the existing body of knowledge, distil the main policy issues and findings, and to identify the analytical gaps. The findings and lessons from research will feed into the ongoing debates and policy formulation, and the identified knowledge gaps will help formulate the immediate and long term agricultural policy research agenda. The World Bank will use the results from this inventory to formulate its economic and sector work (ESW) in the rural sector to underpin its policy dialogue and lending program in Kenya. The inventory and the identified gaps will also assist the government in identifying policy research areas to support the implementation of the SRA. The inventory shall have a broad audience among the stakeholders and the donor community active in the sector. The inventory will be posted on a regularly up-dated web site for wider access.

 

 

Preparation of an Inventory of Research Work Undertaken in Agricultural / Rural Sector in Kenya

 

Authors: Nicole M. Mason, Ayala Wineman, Lilian Kirimi and David Mather

Abstract
Kenya joined the ranks of sub-Saharan African (SSA) countries implementing targeted input subsidy programs (ISPs) for inorganic fertilizer and improved seed in 2007 with the establishment of the National Accelerated Agricultural Inputs Access Program (NAAIAP). While several features of NAAIAP were ‘smarter’ than other ISPs in the region, some aspects were less ‘smart’. However, the efficacy of this program, and the relationship between its design and effectiveness, have been little studied. This article uses nationwide survey data to estimate the effects of NAAIAP participation on Kenyan smallholders’ cropping patterns, incomes, and poverty status. Unlike most previous studies of ISPs, a range of panel data- and propensity score-based methods are used to estimate the effects of NAAIAP. The article then compares these estimated effects across estimators and to the effects of other ISPs in SSA, and discusses the likely links between differences in program designs and impacts. The results are robust to the choice of estimator and suggest that, despite substantial crowding out of commercial fertilizer demand, NAAIAP had sizable impacts on maize production and poverty severity. NAAIAP’s success in targeting resource-poor farmers and implementation through vouchers redeemable at private agro-dealer shops likely contributed to its more favorable impacts than those of ISPs in Malawi and Zambia.

Keywords: input subsidy programs, fertilizer, hybrid seed, poverty, welfare, smallholder farmers, Kenya, sub-Saharan Africa
JEL Classification: I3, I32, I38, Q12, Q18

 

Working Paper 56: The Effects of Kenya’s ‘Smarter’ Input Subsidy Program on Smallholder Behavior and Incomes: Do Different Quasi-Experimental Approaches Lead to the Same Conclusions?

Working paper 15 - Effects of Government Maize Marketing Trade Policies on Maize Market Prices in Kenya

Author(s):  Jayne, Thomas; Meyers, Robert; Nyoro, James


Introduction

Maize is the main staple food in Kenya and is an important source of calories to a large proportion of the population in both urban and rural areas. Maize consumption is estimated at 98 kilograms per person per year, which translates to roughly 30 to 34 million bags (2.7 to 3.1 million metric tons) per year. Maize is also important in Kenya’s crop production patterns, accounting for roughly 28 percent of gross farm output from the small-scale farming sector (Jayne et al., 2001).

Kenyan policy makers have been confronted by the classic “food price dilemma.” On the one hand, policy makers are under pressure to ensure that maize producers receive adequate incentives to produce and sell the crop. Rural livelihoods in many areas depend on the viability of maize production as a commercial crop. On the other hand, the food security of the growing urban population and many rural households who are buyers of maize depends on keeping maize prices at tolerable levels.

For many years, policy makers have attempted to strike a balance between these two competing objectives – how to ensure adequate returns for domestic maize production while keeping costs as low as possible for consumers. Maize marketing and trade policy has been at the center of debates over this food price dilemma, including discussions over the appropriateness of trade barriers and the role of government in ensuring adequate returns to maize production.

The government has pursued its maize pricing and income transfer policies through (a) the activities of the National Cereals and Produce Board (NCPB), which procures and sells at administratively determined prices, and (b) restrictions on external maize trade through a variable maize import tariff. The effects of the NCPB’s activities, and government maize trade policy more generally, on maize market price levels and volatility are both controversial and poorly informed by existing analysis. Given the importance of maize as an income source and as an expenditure item for both rural and urban households, there is a pressing need to understand the effects of government maize marketing and trade policies on market price levels in order to begin to understand the welfare implications and distributional effects of these policies.

The objectives of this paper are to determine the effects of NCPB maize trading activity and the maize import tariff on wholesale maize market price levels and volatility. The analysis uses monthly maize price and trade data covering the period January 1990 to September 2004. Results are based on a vector autoregression (VAR) approach that allows estimation of a counterfactual set of maize prices that would have occurred over the 1990-2004 period had the NCPB not existed and trade restrictions been removed. We assess the separate impacts of policy on wholesale prices in Kitale, a major surplus-producing area, and Nairobi, the major urban demand center in the country.

Results indicate that the NCPB’s activities have indeed had a marked impact on both maize price levels and volatility, but the direction of the effect differed by period. During the 1993/94 drought period, for example, the NCPB appears to have reduced market prices through selling maize at steep discounts to the market. By contrast, since the 1995/96 season, the NCPB’s operations have raised wholesale maize price levels in Kitale and Nairobi by 16.4 and 15.7 percent, respectively, implying a transfer of income from maize purchasing rural and urban households to relatively large farmers. The NCPB’s activities have also reduced the standard deviation and coefficient of variation of prices as well, consistent with its stated mandate of price stabilization.

Whether or not this reduction in price instability has introduced greater or lesser price risk for farmers cannot be inferred from this analysis and is the subject of further research. The maize import tariff, on the other hand, despite generally being set at 20 to 30 percent over the sample period, appears to have raised market maize price levels by only 2 to 3 percent.

Although the model cannot itself answer why this result obtains, we believe that these results are reasonable because of apparently widespread maize smuggling across borders, informal arrangements at border crossings that appear to reduce effective tariff rates, and trade reversals in several years. All of these factors would presumably weaken the impact of the tariff on Kenyan maize price levels.

 

 

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

 

 

 

Authors: Justus Ochieng, Lilian Kirimi, Mary Mathenge and Raphael Gitau

Abstract

Agriculture is the mainstay of the Kenyan economy with an estimated GDP share of 26 percent in 2012, and thus remains an important contributor to employment and food security of rural populations. Climate variability and change have adversely affected this sector. This situation is expected to worsen in the future if the latest findings of Intergovernmental Panel on Climate Change (IPCC) are anything to go by. We estimate the effect of climate variability and change on crop revenue and on maize and tea revenue separately using household panel data collected between 2000 and 2010 in rural Kenya. Effect of climate variability and change is estimated using a fixed effects estimator. Findings show that climate variability and change affect agricultural production but differs across different crops. Temperature has negative effect on crop and maize revenues but positive one on tea while rainfall has negative effect on tea incomes. Long-term effects of climate change on crop production are larger than short-term effects, requiring farmers to adapt effectively and build their resilience. We find that tea relies on stable temperatures and consistent rainfall patterns and any excess would negatively affect the production. Climate change will adversely affect agriculture in 2020, 2030 and 2040 with greater effects in tea sector if nothing is done. Therefore, rethinking about the likely harmful effects of rising temperature and increasing rainfall uncertainty should be a priority in Kenya. It is important to invest in adaptation measures at national, county and farm level as well as implementing policies that prevent destruction of the natural environment in order to address the challenges posed by climate variability and change.

 

Working Paper 55: Effects of Climate Variability and Change on Agricultural Production: The Case of Small-Scale Farmers in Kenya

Working paper - 16 Fresh Fruit and Vegetable Consumption Patterns and Supply Chain Systems in Urban Kenya: Implications for Policy and Investment Priorities

Author(s):  Ayieko, Milton; Tschirley, David; Mathenge, Mary

 

Introduction

Fresh fruits and vegetables are consumed on a regular basis by nearly every household, rural and urban, in Kenya. They play an important role in nutritional balance, as they are rich in vitamins and other nutrients that are vital in controlling diseases (WHO/FAO 2003). Out of the total volume of national fruits, vegetables, herbs and spices produced in Kenya in 2003, amounting to approximately 4.35 million MT some 3.8 million MT or 88% was consumed domestically (Karuga, 2004).

Markets play a major role in this consumption: about 70% of rural households sell some amount of fresh produce, and over 90% buy an average of about Ksh400 of additional produce every month in markets. In urban areas, nearly 100% of households spend an average of over Ksh1,000 each per month on market purchases of fresh produce. Total market sales of fresh produce in urban and rural areas of Kenya likely average Ksh50 billion, or nearly US$700 million per year.

This is a big market! Most fresh fruits and vegetables are only minimally storable, and are not processed before reaching consumers (except for slicing, dicing, mixing, and packaging for some high-end markets). These characteristics mean that the marketing system which links farmers and consumers of fresh produce has a preponderant effect on the level and stability of supply and prices, on the real comes of consumers and especially farmers, and on the quality and safety of these foods. Marketing systems are not static: they change as production patterns, consumption patterns, and technology change, and Kenya is no exception.

These changes in Kenya have received a great deal of attention over the past two years, especially as regards the “rapid rise” of supermarkets, and their potential effects on farmers and consumers. This paper contributes to the empirical basis for policy debate about this phenomenon. We focus on the fresh produce consumption patterns and the marketing system serving Nairobi, home to over 2 million people.

After reviewing our data and methods, we ask two empirical questions: who consumes fresh produce (what are the consumption patterns for fresh produce in Nairobi), and how and where do they obtain it (what are the shopping patterns for these items)? Based on these findings, and on fundamental characteristics of the farm and consumer sectors in Kenya, we reach tentative conclusions regarding the market shares that supermarkets and “traditional” marketing channels are likely to have in a decade’s time. We then briefly examine selected characteristics of these marketing channels, and make suggestions for government and donor investment priorities to improve horticultural markets for farmers and consumers.

 

Fresh Fruit and Vegetable Consumption Patterns and Supply Chain Systems in Urban Kenya: Implications for Policy and Investment Priorities

 

Authors: Daniel Kyalo Willy, Milu Muyanga and T.S. Jayne

Abstract

This study provides empirical evidence on the link between population density and agricultural intensification and other strategies that rural communities use to adapt to increasing population density. The qualitative data used in this study were collected through Focus group discussions (FGDs) among experienced community members who provided historical accounts on the dynamics of rural communities and transitions in agriculture that can be linked to scarcity of land associated with population density growth. The results generated by this study offer some insights on the link between population density growth and agricultural development. The study finds evidence of a Boserupian type of agricultural transformation in rural Kenya. Rural communities mainly responded to scarcity of land through agricultural intensification, migration and off farm diversification. Unsustainable land fragmentation, decline in agricultural outputs and incomes and deterioration in soil quality were cited as key phenomena accompanying the strategies adopted in response to population density growth. From the results we draw some policy implications that can provide insights to policy makers to guide sustainable agricultural development in the densely populated areas which include reversal of land fragmentation, improved market access, proper use of fertilizers and land policies that encourage migration into scarcely populated areas.

 

Working Paper 54: Adaptation to Rising Population Density: Voices from Rural Kenya

Working paper - 17 Urban Domestic Consumption Patterns for Meat: Trends and Policy Implications

Author(s):  Gamba, Paul

Introduction

The importance of Livestock products in the diet of Kenyans is amply demonstrated by the observation that some form of livestock product often constitutes any given meal from low-income households through high-income households. The most common form of livestock products consumed by households relate to either meat or dairy products.

While consumption patterns for dairy and other livestock products have recently been studied, meat has continued to receive very little attention. The dearth of studies particularly with regard to urban and rural meat consumption has translated into inadequate information for policy decisions and poorly informed debates. The absence of informative studies on meat consumption patterns has contributed to the relegation of consumer issues and concerns in the livestock policy arena. The lack of articulation of consumer concerns in livestock policy is aggravated by the weak and uncoordinated consumer organizations.

The overly visible attention accorded production and producer issues in livestock policy only serves to further suppress the consumer dimension. It has however been shown that improved agricultural productivity may ultimately be reflected in increased accessibility and affordability of agricultural products to the relief of low resource households.

A recent study on livestock and livestock products production and marketing (European Union, 2003) observed that a major gap in information exists with respect to national meat consumption data. The study had to rely on estimations to discern meat consumption levels, patterns and trends in both urban and rural areas and among different socio-economic groups.

Although excessive consumption of red meat elicits health concerns, it is also recognized that it is a preferred source of proteins for most households who are particularly inclined towards meat. The study focuses on Nairobi as the major urban center and takes account of the large and expanding human population in the city that would be expected to increase demand and stimulate the influx of livestock from far-flung areas and even neighboring countries. This phenomenon occurs due to the realization that prospects for commercialization are to be found in urban areas where the dispersed but diverse and concentrated population require value addition (processing), infrastructural and delivery services for most agricultural produce.

It has been hypothesized that increasing urbanization and population enhances demand for animal protein (Delgado et al, 1999). The demand for meat is nonetheless tempered by prices, income levels and in some cases health considerations. However, the observation for Sub-Saharan Africa negates this hypothesis since available statistics indicate that this is the only region of the world known to have registered declines in food production including livestock products while recording higher population growth rates and urbanization (FAO, 2004).

This study examines urban domestic meat consumption patterns and emerging trends among consumers with different economic backgrounds and socio-economic characteristics. The channels for acquisition of the different meat products are also examined in addition to the terminal livestock markets. It is expected that the information emanating from this study will provide useful insights on the changing urban consumption patterns, trends and the requisite policy issues.

 

Urban Domestic Consumption Patterns for Meat: Trends and Policy Implications

 

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