Smallholder Farmers’ Household Savings and Their Influence on Adoption of Climate Smart Agriculture Technologies in Nyando Basin, Kenya

Abstract

Adoption of CSA technologies present an opportunity where smallholder farmers can not only be climate change resilient but also increase their agricultural productivity and incomes. Despite their proven benefits, the adoption rate of CSA technologies has been low mainly due to lack of credit access to small-scale farmers. Household savings has however been found to be an important budget item in rural households which farmers use to finance their farms. Evidence from literature point out that inadequate attention has been paid at household savings as a factor which has been established as a key contributor to farm investment in rural households which hinders development agencies from focusing on household savings as a strategy for scaling up CSA technologies .The study therefore compared the characteristics of households with savings and those without savingsin the study area, analyzed determinants of household savings and further examined the influence of household savings on adoption of individual CSA technologies and on the number of CSA technologies adopted by a household in Nyando Basin.The study tested the hypothesis that; there is no significant difference on demographic and socio-economic factors between savings households and households without savings, demographic, socio-economic and institutional factors have no significant influence on household savings among smallholder farmers and household savings has no significant influence on farmers’ decision to adopt CSA technologies. Using stratified random technique, a sample 122 smallholder farmers was interviewed using structured questionnaires. Chi square statistic was used to compare the differences between the two groups while a Tobit model analyzed the determinants of household savings. Multivariate probit (MVP) model and Poisson model was employed to examine the influence of household savings on intensity to adopt CSA technologies. The findings revealed that smallholder farmers had a high propensity to save. More than half of the sampled households had savings. The major savings avenues were community groups, banks and home in that order. Age, sex, Financial literacy training, credit access and wealth index positively influenced household savings while total dependants and distance to cattle market had negative effect. MVP results showed that household savingshad a significant positive influence on adoption of agroforestry, improved breeds and greenhouse farming technologies while Poisson regression results revealed that household savingshad a positive and significant influence on the number of CSA technologies adopted by a household. In order to scale up adoption of CSA technologies through household savings, the study recommends for empowering of local community groups where most farmers save. This can be achieved through training on group management and financial literacy as it positively influenced household savings. There is also need for building capacity and of existing farmer groups training centers as well as widening their coverage. In addition, introduction of e-wallets can stimulate rural household savings. Future studies can widen the scope of household savings by accounting for non-monetary household savings. Keywords:Climate Smart Agriculture technologies, Smallholder farmers’ household savings, Nyando Basin