dc.description.abstract | Contract farming is becoming popular in most developing countries. Most African farmers operate
relatively smaller farm sizes and are resource-poor, characterized by poor access to farm and
financial inputs and operate in unreliable inputs and output markets. Extant literature shows that
contract farming offers solutions to most of these constraints. However, not all smallholder farmers
participate in contracts and those who do, often violate the contracts. Empirical research on effect
of contract farming on smallholder livelihoods show inconclusive results; some studies have
shown that contract farming improves farmers’ productivity and income, while others find it
having a negative effect on income and productivity. This study therefore analyzed participation
in contract farming and its effects on technical efficiency (TE) and smallholder farmers’ income
in Bungoma and Busia counties in Western Kenya. The present study focused on chili and spider
plants as the targeted vegetables due to their richness in vitamins and phytochemicals. Primary
data was collected from 300 smallholder vegetable farmers in Bungoma and Busia counties. A
Probit model was used to analyze the determinants of participation in contract farming while
stochastic production frontier and metafrontier models were applied in analyzing TE and
technology gaps. Endogenous treatment regression model was used to analyze the effect of
participating in contract farming on farm income. Results revealed that, land size had a positive
effect on participation in contract farming for both spider plant and pooled farmers. Contract
farming had a positive effect on TE and technology gap ratios (TGRs) for both crops. Participation
in contract farming had a positive effect on farm income for spider plant, chili and pooled vegetable
farmers. The incentives and disincentives of contracting firms should be put into account when
designing programmes and policies for promoting contract farming to ensure that there is a balance
in benefits between the contracting and contracted parties.
Key words: Contract farming, chili, spider plant, TE, TGR, income. | en_US |