Effect of Institutional Credit to Agricultural Output in Irrigated Areas :a Case Study of Bura Irrigation Scheme
Abstract
Kenya's economy has for a long time relied on rain-fed agriculture which is however possible on
arable land which constitutes only 20% of land cover, the remaining 80% being semi-arid in
nature. There are several rivers that pass through semi-arid regions which are not utilized in
irrigation purposes. Majority of farmers in semi-arid region are poor and cannot be in a position
to start irrigation without assistance from government and other credit institutions. Farmers need
money to purchase farm inputs, pay workers and other farm operational cost. The money could
easily be obtained on credit from institutional credit. This paper analyzes the effect of
institutional credit to farmers in irrigated areas on expansion of agricultural production output
with specific reference to Bura Irrigation and Settlement Project (BISP) using cross sectional
data collected from 70 farmers using questionnaire survey. The results of the study indicate that
credit, improves production capacity among maize farmers while increased labor and other
inputs utilization leads to reduced production capacity among the farmers. At the same time the
findings suggest that increasing input combinations reduces the output levels, hence, decreasing
returns to scale among the maize farmers.
Citation
Masters Of Economics And Policy Management, University Of Nairobi, 2013Publisher
University of Nairobi,