Economic Analysis of Agro-food Value Chains and Effect on Household Food Security and Poverty Alleviation- the Case of Wheat, Dairy and Beef in North West Mt. Kenya
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Date
2021Author
Mwangi, Veronica W
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Agricultural activities have become increasingly organized along value chains that constitute
actors and activities that cause the flow of food from production to consumption. This change
has been necessitated by among other things, globalization, the need to efficiently meet rising
and changing consumer demand and preferences, emergence of niche markets and the need to
meet quality standards. However, major concerns still persist as to the performance of agro-food
value chains, particularly in developing economies. Evidence has shown that a significant share
of the population involved in agro-food value chains remain food insecure and poor. Profound
changes of our current agro-food value chains are needed if they are to meet current and future
demands.
This study sought to assess the contribution of three agro-food value chains to participating
actors by establishing the value added and its distribution among the actors. The study analysed
the structure of the agro-food value chains in terms of economic activities, actors, product flows
and governance. Furthermore, constraints to efficiency and growth were assessed at every level
of the agro-food value chains. Moreover, the study sought to examine the status and determinants
of household food security and poverty of smallholder producers in the agro-food value chains.
Therefore, the main objective of the study was not only to analyze the structure and nature of the
agro-food value chains and the economic returns derived by participants of the value chains but
also their contribution to household welfare in terms of food security and poverty alleviation.
To achieve the objectives, three agro-food value chains of wheat, dairy and beef in North West
Mt. Kenya were selected for study. Five value chain activities of production, trade, processing,
distribution and retailing for each of the agro-food value chain were considered. Using multistage
stratified random sampling, a sample of 312 respondents including producers, traders,
processors, distributors, retailers and key informants were selected for the study. The study used
value chain analysis to examine the structure, value addition, governance and constraints in the
agro-food value chains. The Household Food Insecurity Access Scale (HFIAS) and Foster-
Greer-Thorbecke Poverty (FGT) Indices were used to examine the food security and poverty
status of smallholder producer households. Multinomial logit, poisson and logit regression
models were utilized to assess the determinants of food security and poverty among smallholder
producer households.
Results showed that the agro-food value chains constitute five main economic activities of input
supply and production, trade and transportation, processing, wholesale and retail that are
interlinked; and through which wheat, milk and beef products flow and are transformed for final
consumption. The actors involved in these activities are input suppliers, farmers, traders and
brokers, processors, distributors, wholesalers and retailers. Results also revealed that some actors
add more value than others. Actors such as large-scale farmers and ranchers, processors and
traders obtain higher gross margins compared to other actors. The governance structure of the
agro-food value chains is heavily influenced by the marketing structure of the value chains.
Results revealed weak vertical linkages in the wheat and beef value chains compared to the dairy
value chain and strong horizontal linkages at the production level of the agro-food value chains.
Moreover, there exists multiple power centers within the value chains with large-scale farmers
and ranchers, traders and processors being dominant in the agro-food value chains.
Constraints to value chain efficiency and growth exist at every stage of the agro-food value
chains. However, smallholder producers and pastoralists seemed to face multiple constraints
compared to other actors in the value chains. Furthermore, results revealed that 61% of the
smallholder producer households were either severely, mildly or moderately food insecure.
Higher incidences of food insecurity and poverty rates were found in households in the beef
value chain. Income and income-related variables, household size, membership in farmers’
groups, transport assets, household energy, number of cattle and access to extension services
were significant in determining household food security and poverty.
Strategies focused on value chain upgrading should consider constraints facing each actor along
the value chain to achieve improved coordination and holistic growth of the value chains.
However, innovations and interventions should target actors where the greatest impact on food
security and poverty reduction can be achieved. Policies that are geared toward enhancing
smallholder farmers’ incomes, increasing productivity, building strong farmer groups have the
possibility of getting smallholders out of persistent poverty and recurrent food insecurity.
Moreover, such intervention strategies should be differentiated according to the food security
and poverty status of different producers and an understanding of the aspects that contribute most
to their vulnerability to food insecurity and poverty.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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