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Impact of Contract Farming on Smallholder Poultry Farmers’ Income in Kenya

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  • Wainaina, Priscilla W.
  • Okello, Julius Juma
  • Nzuma, Jonathan M.

Abstract

Contract farming is a form of vertical coordination largely aimed at correcting the market failure associated with spot markets that arise due to imperfect information. However there is still no consensus in the literature on the impact of contract farming on the welfare of smallholder farmers. While some studies have argued that contact farming improves access to ready markets by smallholder farmers, other studies have suggested that contract farming lowers the incomes of smallholder farmers because the contractors wield greater market power over the farmers. Consequently, it is seen as a blessing by some and a necessary evil by others. This study uses a propensity score matching technique to shed light on the impact of contract farming on smallholder farmers. The study also examines the conditioners of participation in contract farming. It uses data collected from 180 smallholder poultry farmers stratified by participation in contract production. The study finds that, on average, contracted farmers earned more net revenue per bird compared to the independent farmers, by approximately 27 percent, and as such participating in contract farming could improve the welfare of these small holder poultry farmers. The study discusses the policy implications of the findings.

Suggested Citation

  • Wainaina, Priscilla W. & Okello, Julius Juma & Nzuma, Jonathan M., 2012. "Impact of Contract Farming on Smallholder Poultry Farmers’ Income in Kenya," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126323, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae12:126323
    DOI: 10.22004/ag.econ.126323
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    Cited by:

    1. Xolile Mamba, Tangetile, 2016. "The role of contracts in improving access to credit in the smallholder livestock sector of Swaziland," Research Theses 243472, Collaborative Masters Program in Agricultural and Applied Economics.
    2. Mwambi, Mercy & Oduol, Judith & Mshenga, Patience M. & Mwanarusi, Saidi, 2013. "Does Contract Farming Improve Smallholder Farmers Income? The Case of Avocado Farming in Kenya," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161514, African Association of Agricultural Economists (AAAE).
    3. Nyang'au, Paul Nyamweya, 2018. "Impact Of Integrated Pest Management Technology On Food Security Among Mango Farmers In Machakos County, Kenya," Research Theses 276453, Collaborative Masters Program in Agricultural and Applied Economics.
    4. Mailu, Stephen & Will, Margret & Mwanza, Rosemary & Nkanata, Kinyua & Mbugua, David, 2014. "Milk supply contracts and default incidence in Kenya," MPRA Paper 57381, University Library of Munich, Germany, revised 10 Apr 2014.
    5. Paul Maganga Nsimbila, 2021. "Determinants of Contract Farming Adoption and its Impact on Productivity of Smallholder Cotton Producers in Tanzania," International Journal of Social and Administrative Sciences, Asian Economic and Social Society, vol. 6(2), pages 55-69, December.
    6. Githiomi, Caroline & Muriithi, Beatrice & Irungu, Patrick & Mwungu, Chris M. & Diiro, Gracious & Affognon, Hippolyte & Mburu, John & Ekesi, Sunday, 2019. "Economic analysis of spillover effects of an integrated pest management (IPM) strategy for suppression of mango fruit fly in Kenya," Food Policy, Elsevier, vol. 84(C), pages 121-132.
    7. Anh Tru Nguyen & Janet Dzator & Andrew Nadolny, 2018. "Contract farming, agriculture productivity and poverty reduction: evidence from tea estates in Viet Nam," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 25(1), pages 109-145, June.
    8. Jiguang Chen & Ying‐Ju Chen, 2021. "The Impact of Contract Farming on Agricultural Product Supply in Developing Economies," Production and Operations Management, Production and Operations Management Society, vol. 30(8), pages 2395-2419, August.
    9. Ba, Hélène A. & de Mey, Yann & Thoron, Sylvie & Demont, Matty, 2019. "Inclusiveness of contract farming along the vertical coordination continuum: Evidence from the Vietnamese rice sector," Land Use Policy, Elsevier, vol. 87(C).
    10. Mishra, Ashok K. & Kumar, Anjani & Joshi, Pramod K. & D'Souza, Alwin & Tripathi, Gaurav, 2018. "How can organic rice be a boon to smallholders? Evidence from contract farming in India," Food Policy, Elsevier, vol. 75(C), pages 147-157.
    11. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, P.K., 2019. "Impact of traditional versus modern dairy value chains on food security: Evidence from India’s dairy sector," Food Policy, Elsevier, vol. 83(C), pages 260-270.
    12. Nyang’au, Paul Nyamweya & Nzuma, Jonathan & Irungu, Patrick & Muriithi, Beatrice, 2018. "A Thesis Submitted In Partial Fulfillment Of The Requirements For The Award Of A Master Of Science Degree In Agricultural And Applied Economics, University Of Nairobi," Dissertations and Theses 276387, University of Nairobi, Department of Agricultural Economics.

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