Comparative profitability and optimum resource use in the Ainabkoi east and west settlement schemes, Kenya
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Earlier studies on the performance of rainfed low density settlement schemes revealed that agricultural production was not as high as had been expected. Farm profit showed a lot of disparities and some resources were underutilized. Following these observations, a comparative study was undertaken in vrqer to look into the current performance of two of the earliest low - density schemes: Ainabkoi East and West. Two objectives were persued: (1) To study the performance of the existing firming systems and compare with sample average data. I (2) To compare the patterns of production and resource use 'under the existing and optimum farm organizations. A random sample of farms was selected from each settlement scheme. These samples provided the required primary data. Relevant secondary data were obtained from the local Co-operative Society and the Settlement Office, Eldoret. All the collected data referred to the 1979 - 80 crop year. Residual accounting and gross margin analysis were used to identify and compare farm profits in the samples. Profit maximizing linear programming models were used to study resource use for defined average farm situations. Residual accounting showed that on the whole most farmers in the two samples obtained less than their respective average net farm incomes as a result of low levels of production.Although the average situations indicated that there wererpo sd.tLve returns to management, there were nevertheless, several individuals in each sample who showed negative returns to their management activity (excluding their manual labour). A comparison of the average farm situations in the two samples studied indicated that Ainabkoi West had more total farm receipts but less total farm expenses than that of Ainabkoi East. Therefore, on average the former showed more net farm income than the latter. Gross margin analysis showed that livestock contributed the bulk of total farm gross margins in both average farm situations. Potatoes and maize were the next most important contributors and pyrethrum contributed the least in Ainabkoi West. In Ainabkoi East this situation changed vlithpyrethrum contributing more than maize but less 'thari" potatoes. On a per hectare basis, the gross margins were higher for all the enterprises in Ainabkoi West than in the East, except for pyrethrum. Gross margins per man-hour were also higher in Ainabkoi \Vestfor dairying and crop activities except in the case of pyrethrum. The results of the linear programming models revealed that family labour during certain peak periods was an important limiting constraint. RoV/ever, cash also became a limiting factor whenever labour wa s allowed to be hired for all farm enterprises. Furthermore, the available land was only exhausted in Ainabkoi West when hired labour was used specifically for livestock and no cash credit was available. Cash credit was shown to be able to improve farm performance in both settlement areas. Nevertheless, programmes using credit, where a minimum maize activity level was specified, did not result in better-performance than programmes using credit where all activity levels were unconstrained. Optimum enterprise combinations and resource - use patterns resulted in higher total gross margins in Ainabkoi West than in Ainabkoi East for all model comparisons. In conclusion, the study showed that there was scope for improvement in farm profit in the Ainabkoi East and West samples. On average, the production and resource - use patterns were sub - optimal and better results could have been obtained by supplying credit and improving on labour utilization. Consequently, there is need to introduce improved crop and animal husbandry technfques which can use the available re- sources more,sufficient ly. Finally, it is suggested that immediate benefits could be derived by farmers in the area studied from provision of adequate market information. This would include prices and market opportunities for all types of farm produce, especially potatoes which are handled outside the Co-operative Society in the settlement area. Comprehensive market information from Government sources would act as an incentive to achieve the best combinations of enterprise and resources under changing economic condi tions.