An economic analysis of cereal banks in bungoma and Butere-Mumias districts of western kenya

Abstract

Cereal banking involves buying of cereals or grains during periods of lower prices, storing and selling out the stocks when prices are higher. In Kenya they were started with the aim of enhancing local food security and surplus marketing. Cereal banks are some of the interventions which have been tried using non-governmental approach although they have received mixed teactions about their performance especially on the issue of sustainability. Weaknesses in the analytical and empirical arguments for cereal banks have been highlighted. This study addressed some of these issues by analyzing the factors that influence farmer participation in cereal banking and effects of cereal banks on prices and food security. The study area comprised two districts in Western Kenya where cereal banks were initiated through support organizations. Analytical procedures included descriptive analysis of the socio-economic characteristics of the households studied and logistic regression of the socio-economic factors which were perceived to determine participation in cereal banking. The significant factors that were identified as determining participation in cereal banking include age, gender and farming experience of the household head; distance to the nearest market; household access to credit and selling to cereal banks. There was evident of weaknesses related to consistency and general performance of cereal banks, especially after the supporting organizations reduced their involvement. Recommendations suggested on how these institutions can be improved include government support to enhance financial capital, fair input markets and infrastructure development in agricultural potential rural areas and possibly the establishment of intermediary institutions which can assist farmers in various aspects of group management and activities.