Analysis of the effect of land tenure on technical efficiency in smallholder crop production in Kenya

Abstract

The agricultural sector in Kenya has been facing several challenges among them declining yields. Although agricultural production in smallholding of less than three acres is the dominant characteristic of the economy in Kenya, reasons for declining crop yield have eluded to research effort and policy. Among them it is not clear how tenure systems of holding land influence technical efficiency.in conjunction with other socioeconomic factors. This study aims at examining the technical efficiency of alternative land tenure systems among smallholder farmers and identifying the determinants of inefficiency with the objective of exploring land tenure policies that would enhance efficiency in production. The study is based on the understanding that land tenure alone will not be enough to indicate the levels of efficiency of individual farms; other socio economic factors such as gender, education and farm size would also be expected to be important determinants of efficiency. A stochastic frontier function was used to estimate technical efficiency and relate it to land tenure and socio economic factors using data from 22 districts from the main agro ecological zones in Kenya. Land owned with title was found to have the highest technical efficiency level while rented land had the lowest efficiency level. Larger parcels of land were more technically efficient in crop production than smaller sizes of land. Continued subdivision of land especially in the high potential areas of the country would have a negative effect on food production. Parcels of land owned by households headed by persons with no education had the lower technical efficiency levels than those parcels owned by households headed by persons with higher levels of education. Households headed by persons with post secondary education had the highest technical efficiency levels. Households that were accessing credit had higher XLI technical efficiency levels than those not accessing credit. This implied that provision of credit facilities to farmers would have a positive effect on their ability to produce more efficiently. Households participating in producer groups had a higher technical efficiency level than those not participating in group activities. This study had several recommendations; it is important that the process of land titling be extended to all regions of the country because this may increase tenure security which would lead to increased technical efficiency. Land subdivision in high potential areas of the country should be discouraged because larger parcels of land are more technically efficient. Farmers should be provided with affordable credit either through the AFC or other institutions in order to ensure that they acquire the required farm inputs in the recommended proportions hence increasing their technical efficiency levels. Farmers should also be encouraged to participate in producer groups because is acts a forum for social networking which would allow transfer of information and skills. Higher education level was associated with higher technical efficiency. Recent government policy on free primary and secondary education is a positive move towards improving the technical efficiency levels of farming households and this policy should be upheld.