| dc.description.abstract | Coffee is the third most important agricultural commodity to the Kenyan economy after
horticulture and tea in terms of contribution to Gross Domestic Product (GDP) and
employment creation in the agricultural sector. The enterprise contributes about 10 percent of
the total agricultural export earnings, and up to 30 percent of the total labor force employed
in agriculture. It is an agricultural export commodity that employs about 250,000 people
directly and an estimated 6 million people indirectly. The performance of the industry has
been falling in the past two decades mainly due to deterioration of the world market. When
the producer prices become consistently low, farmers uproot their coffee and replace it with
other enterprises such as maize, beans, Irish potatoes and bananas or intercrop with the
various crops. Since the small-scale farmers have small pieces of land, they usually intercrop
coffee with the various subsistence crops as a strategic measure against food insecurity and
reduced farm incomes.
Effects of other crops on the overall economic efficiency of coffee in the intercropping
system are not known. The overall economic efficiency is a combination of the technical and
allocative efficiency. Mathira district which has an area of about 254 square kilometers was
purposefully selected for the research since no similar study had been carried out there in the
past. Data was collected through structured questionnaires which were administered to
farmers sampled through systematic sampling procedure. The Data Envelopment Approach
model which computes economic efficiency indices was used in the first stage of the analysis
while Tobit regression model was used in the second stage to analyze the factors that
influence the level of economic efficiency.
The study established that overall mean technical efficiency for coffee farmers in Mathira
district was 89 percent implying that farmers could reduce the current physical input use by
about 11 percent on average and still realize the same output levels. The average allocative
efficiency was 50 percent meaning that farmers could reduce input costs by about 50 percent
without affecting the current production levels. Combination of technical and allocative
efficiencies resulted in a mean overall economic efficiency of 45 percent for coffee
production in the study area. This implies that there was potential for farmers to improve their
economic gains by about 55 percent. The study also established that economic efficiency was
significantly and positively influenced by the level of education, access to extension services
and the age of the household head. This was consistent with the expectation since formal education improves the capacity to learn and implement ideas. On the other hand, contact
with extension services improves skills and information on good crop husbandry practices
thereby influencing economic efficiency positively.
Age was observed to have a positive and significant influence on economic efficiency though
the turning point was not established. To address this observation, the government may
formulate policies that motivate the younger generation to be more actively involved in
coffee production through selective strategies such as input subsidies for the youthful and
middle aged farmers. The scenario of age influencing economic efficiency positively may
however not be expected to continue indefinitely. To counter the tendency of the elderly
generation holding on to coffee even when they are too old, the government may motivate
them to progressively hand over coffee production enterprise to the younger generation
through establishment of social schemes such as retirement benefits from farm enterprises.
The study also established that economic efficiency was significantly and negatively
influenced by the household head attending off-farm activities. This implies that the forgone
labor was not replaced by equivalent skills that would at least sustain economic efficiency at
a level formerly realized by the household head. As a way of addressing this issue, the
government through institutions that provide extension services may enhance provision of
commercial agriculture so that farmers with opportunities for going for off-farm activities
may make informed decision about whether to continue working as farmer managers in their
farms or go for off-farm work. Farmers with knowledge on commercial agriculture are also
more likely able to guide those who succeed them as farm managers when they go for offfarm
activities thereby preventing decline in economic efficiency. Access to credit facilities
from cooperative societies also significantly influenced economic efficiency negatively. This
was an indication that credit funds acquired from the societies might have been diverted to
other uses which were not promoting coffee production. Proper mechanisms for monitoring
and evaluation of agricultural activities including utilization of credit may be institutionalized
in extension services so as to address this problem. Intercropping coffee with other crops was
also shown to have a significant negative influence on economic efficiency. This implies that
economic viability of intercropped coffee was less than for non-intercropped coffee. | en |
