An Economic Analysis of Factors Influencing Participation in Pyrethrum Group Marketing Channels Among Farmers in Nyandarua County, Kenya

Abstract

This study analyzed the factors influencing the decision and level of participation of smallholder pyrethrum farmers (household heads) in group marketing in Nyandarua County. The data which were collected through questionnaires administered to 124 household head farmers and analyzed using Ms Excel and Statistical Package for Social Science (SPSS). Participants were defined as farmers who were members of a pyrethrum marketing group and therefore used group marketing channels. Descriptive statistics and a two-stage Heckman model were used to determine factors influencing farmers' decision to participate and the level of group market participation in the study area. The results showed that participants were 78.2% and non-participants were 21.8% of all the 124 farmers. Findings on the gender of farmers indicated that 80.6% were male while the remaining ones were female. The mean land size for the participants and non-participants was 3.5 and 3.0 hectares (ha) respectively, which was statistically significant (t>2.0). Credit facilities to boost pyrethrum production were accessed by 24% and 15% of the participants and non-participants, respectively. Women groups were the major source of informal cash credit. All the respondent households had contact with extension services once a year which was not adequate. Results of the first stage of the Heckman model showed that age, gender, education level of the household head, other farm income, distance to the market, number of extension visits, price of pyrethrum and membership in pyrethrum producer groups positively and significantly influenced farmers' decision to participate in group marketing. Results of the second stage of the Heckman model showed that gender of household head, monthly non-farm income, good road condition and membership in pyrethrum marketing group positively and significantly influenced the pyrethrum farmer's level of market participation in the county. The second objective of this study sought to examine the effect of participation in the group marketing channels on smallholder pyrethrum farmers’ gross margins. Results showed that education level of the household head, credit availability, pyrethrin content of the produce and membership of the household head to pyrethrum marketing group positively and significantly increased the pyrethrum farmer's gross margins in the county. It was recommended that the County Government of Nyandarua should ensure that the feeder roads from the farms to the market are always in good condition. The Ministry of xiv Agriculture should increase the frequency of extension contact with pyrethrum farmers in the county. The Pyrethrum Board of Kenya should support the farmers by buying directly from them to eliminate brokers. Policy makers in the Ministries of Social Services and Cooperatives should promote membership to farmer groups or cooperatives. The Agricultural Finance Corporation should sensitize the farmers in the county about their financial products so that they can make informed decisions to use them. The study concluded that the farmers’ decision to participate in pyrethrum group marketing channel was significantly influenced by their social, institutional and economic factors and that the farmers’ participation in group marketing channels significantly increased their gross incomes. Results also revealed that once a smallholder farmer decided to enter group marketing of pyrethrum, the gender of the household head, monthly non-farm income, road condition and the farmers' group membership are key factors that influenced the volumes they sold into the market. Keywords: Pyrethrum farmers, Marketing channels, Heckman model, Nyandarua County