Human resources and technical skills in agricultural development: an economic evaluation of educative investments in Kenya's small farm sector

Abstract

It is likely that the development of an economy depends upon, and in part consists of, the growth of useful skills, knowledge and information among its people. The question posed by this study is the extent to which the productivity of Kenya smallholders is affected by their exposure to educative services that stand to enhance those human resource factors. The school system in countries such as Kenya is grossly over-supplying the non-farm labour market. The result is that the vast majority of those leaving school, and certainly the incremental leavers resulting from an expansion of the system, must be employed (if at all) on the farms. Whether schooling raises the productivity of farmers, is thus the central question in evaluating social returns to investment in the system. The use of a disequilibrium "modern" sector wage is unlikely to shed light on this issue. The other area of investment policy that motivates this study is that of agriculture. Where the productivity of that sector is dependent on the decision-making, and therefore the abilities of individual farmers, efforts to improve those abilities are crucial components of a development strategy. Rational growth and investment in such institutions and agencies is not possible without some measure of farmer productivity changes that are attributable to them. The data base for the empirical estimations of this study is an intensive survey of Kenya smallholders carried out by, and with the cooperation of the Kenya Ministry of Finance and Planning. The survey involved opening and closing inventories and monthly visits to some 1500 farms over the period of a year. The data include information about assets, production, costs, etc ; broken down crop and livestock enterprise on each farm. In addition, a complete profile of the farmer's human resource characteristics was collected. This includes not only his formal education, age and experience, but his exposure to a range of educative services aimed directly at farmers. While a number of serious difficulties had to be overcome with the validation of the data set, it does provide a wealth of economic information for empirical research. The approach of this study is that of examining the production relations of the farm firm, and testing the extent to which educative variables can be shown to affect economic performance. Three different kinds of production functions are developed and fitted; each is designed to shed light on a. different aspect of the farmer's technical and allocative efficiency. The first is the conventional,single commodity type of engineering function, with human resource factors formulated to account for "neutral" shifts in productivity. The second is a family of aggregate earnings functions in which educative inputs either increase earnings for a given resource use, or change the intensity with which particular physical factors are used. The third is a set of value added or profit functions in which each of the farmer's physical factors is treated either as fixed or variable. When a factor is treated as variable, the net earnings or profit consequences of its use are attributed to the human resource characteristics of the farmer. The extent to which those characteristics enhance the economic efficiency of the firm can then be tested. The findings of this study support the notion that educational investments are seriously out of balance in Kenya. Applied educative services to farmers have been relatively neglected while the development of formal schooling has, from an economic point of view, been grossly overemphasized. While schooling may raise the innovativeness of producers once they are committed to farming, it generally appears to disorient them from their farms and thus have a negative effect on performance. While each of the applied educative services has its own institutional and quality problems, resulting in different levels of effectiveness, such services are shown to be a significant source of farm productivity. They have clearly received inadequate attention and investment. The farmer's experience tends to be his most useful source of decision-making knowledge.