Influence of sources of finance on performance of smallholder sugarcane farmers in Kisumu East District-Kenya
Okumu, Martin O
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Sugarcane fanning is one of the major agricultural economic activities taking place in Kisurnu East district. In the recent past, this activity has been on the increase after a long period of minimal activity due to what farmers indicated as lack of profitability. With the establishment of a private factory in the area, sugarcane fanning in this area is regaining and is promising a significant contribution to the economy of the region. Sugar industry is set to face stiff competition after liberalization of sugar trade within COMESA region in 2012, this development will mostly affect the farmers because sugar factories will have to reduce the prices at which they purchase sugarcane, to enable them compete in pricing with cheap sugar imports from COMESA trading block. It is therefore important to identify the best sources of finance for sugarcane farming that would be available for smallholder fanners, as one of the most critical factors in ensuring profitable sugarcane farming. Through key informant interviews and literature review, this study was to find out the financial needs of sugarcane farmers, identify common sources of finance for sugarcane farming in the region and recommend on the best financial options for sugarcane farming. This will guide potential financiers and investors on the kind of financial needs of the sugarcane fanners, as well as potential risks and returns in this investment option. The target population for this study was all the 1900 sugarcane fanners in Kisumu East district. Sugarcane farmers in the district are divided into two zones, 9 outgrower societies, the society officials were asked to help in randomly selecting 286 farmers for in-depth interviews. Administrative records will be obtained from Kibos Sugar and Allied factory detailing the cost of input per hectare of land and also from Agricultural finance cooperation bank which is incharge of administering money from Kenya Sugar Board for this region. The study's finding indicates that source of finance is an influence on perfonnance of smallholder sugarcane farmers. With cheaper source of funding, the farmers are able to perform better leading to an increase in income. The demand for sugar is always increasing and therefore what is needed is to reduce the cost of production so that local sugar can compete with sugar produced in other countries. ANOVA test results revealed that there is a relationship between the sources of finance and performance of sugarcane farmers. The net return from the personal finances was higher than those from other sources. This is attributed the fact that the cost of finance in this source is relatively cheaper than the other sources. The banks which are always a major of finance in the economic activities in all countries should lower their costs of credits and structure their loans in manner that is suits the famers needs, and then clearly sensitize the farmers to enable them access such facilities. The government system should ensure that title deeds and subdivision of land services are easily available to the farmers at an affordable cost. The government should also intervene in providing finances to the fanners at affordable costs, with minimal and clear requirements on those who want to access such funds. Through the study it was concluded that source of finance performance of sugarcane farmer by smallholder fanners in the study region, which led to recommendation that the government should intervene by providing a cheaper source of finance. Further studies should be carried out to establish the influence of finance on performance of other crops.