The supply responsiveness of cotton farmers in Central/Eastern Kenya

Abstract

The broad objective of this study was to identify the reason(s) for the sluggish growth in annual seed cotton output and failure to attain its targeted supply levels for Central/Eastern Kenya over the last two to three decades. In an attempt to achieve this objective the trend in annual seed cotton output, yields of cotton, annual hectarage and nominal and real producer cotton prices were examined in addition to the supply response models for seed cotton for Embu, Kirinyaga, Kitui, Machakos, Meru and Murang'a districts being estimated. The estimated supply response models were used to test two hypotheses: that cotton farmers have responded perversely to increases in the real and nominal producer cotton prices and that the degree of price responsiveness is the same among cotton farmers in the six districts covered in the study. It was found out that annual seed cotton output rose significantly over the last two to three decades for Embu, Kitui, Machakos and Meru districts. It declined significantly only for Murang'a District. Cotton yields declined significantly over the same period for most of the above six districts thereby occasioning the sluggish growth in annual seed cotton output and failure to attain its targets for the region over that period. The rise in the region's annual seed cotton output was due to that of the hectarage of cotton for most of the six districts. The log-linear version of the Nerlovian Partial Adjustment model was used to estimate the price elasticities of supply for seed cotton for the six districts. The hectarage of cotton during any year in a district was assumed to be a function of the previous year's hectarage, lagged seed cotton price, lagged producer price of the most competing enterprise, current annual rainfall amounts and a trend variable. The first and second hypotheses were tested by means of student's t-test and Chow test, respectively. The results of testing the first hypothesis were inconclusive for most of six the districts while the second hypothesis was rejected at the 0.01 level of significance. The estimated price elasticities of supply for seed cotton for the region varied from a short run value of 0.92 for Machakos District to a long run value of 5.79 for Kitui District. It is recommended that measures to improve the prevailing low and declining cotton yields for the region be identified and executed. The targets set for annual seed cotton output in the National Development Plans need to be realistic and district specific. The distortions in the crop's factor and product markets also need to be removed. The practising of district specific pricing policy or relaxing the control on the nominal producer cotton price could facilitate the attainment of the annual national targets for seed cotton production.