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Title:Production and Productivity Effects of Informal Contract Farming in Kenya's Smallholder Horticultural Sub-Sector
Authors:Obare, G.A.
Kariuki, I.M.
Year:2003
Periodical:Eastern Africa Journal of Rural Development
Volume:19
Issue:1
Pages:13-23
Language:English
Geographic term:Kenya
Subjects:agricultural credit
agricultural productivity
small farms
grain legumes
Agriculture, Natural Resources and the Environment
Development and Technology
Abstract:This paper uses data from a 2001 household survey of small-scale farming households in Kirinyaga District, Kenya, to explore production effects of informal credit contracts in French bean farming, where formal markets for surplus production are seemingly shallow and imperfect. Specifically, it examines whether informal arrangements spur productivity and intensity of inputs use. A three-stage least square modelling strategy was used to quantify the direct and indirect effects of contracts on French bean output conditional upon infrastructure, institutional and farmer-specific socioeconomic factors. The results show that the use of fertilizer, pesticides and high yielding variety seeds, and French bean output price have direct positive and significant effects on productivity. On the other hand, the period under contract negatively and significantly affects productivity. Indirectly, however, informal contract - proxied by credit value - and farm size positively influence productivity through significant variable input use intensity whereas the input market prices negatively and significantly influence variable input demand. Policy implications are drawn. Bibliogr., notes, sum. [Journal abstract]
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