Contract farming : A comparative study of smallholders in the Mumias area of Western Kenya

Abstract

The increasing interest in and incidence of contract farming, organised by the peripheral state and international agribusiness and financed by the international lending and aid agencies, has created a debate as to it's usefulness and suitability as a vehicle for accelerating rural development. By means of a comparative study of contracted and non-contracted smallholders in the Mumias area of Western Kenya, where a sugarcane contract farming scheme has been in operation since 1973, this study attempts to address some of the questions arising from that debate. In particular the study sets out to discover the effects of the contract scheme on subsistence production, differentiation processes and centralisation of land ownership in the area. It was also hoped to discover whether the introduction of the contract sugar scheme has stimulated overall development in the area, as was assumed by the Kenyan government when it commissioned the scheme. It was demonstrated that as regards subsistence production in the area, although difficult to prove statistically, it appears that contracted smallholders have lower food crop self-sufficiency and thus have a larger reliance on the market for food purchases than is the case with non-contracted smallholders. It was also shown that although there were no significant differences between the two groups of smallholders in terms of area of food crops, there were statistically significant differences between the two groups as regards food crop production. The contract smallholders have slightly higher maize yields, while the non-contract smallholders' higher cassava yields could indicate a lowering of famine insurance by the contracted smallholders. There is a little direct evidence of declining smallholder living standards predicted by critics of contract farming, although there are indications that the terms of trade between food and sugarcane prices are worsening, thus eroding contract smallholder living standards. Furthermore it was shown that the Mumias area as a whole could have an annual food deficit equivalent to 10,000 tonnes of maize, thus creating a dependence on food sources outside the area which could prove disastrous in times of drought or famine. As regards differentiation, the extra income from sugarcane cultivation has led to large and statistically significant differences between the two groups of smallholders in terms of both gross agricultural product and net agricultural surplus. However, it was shown that the present day distribution of agricultural surplus among all smallholders is probably more equitable than was the case before the introduction of contract farming, due to the relatively equal distribution of cane incomes within the contracted smallholders. The contracted smallholders hiring of unnecessary labour, the amount of seasonal work available directly from M.S.C. and the necessity for non-contract smallholders to earn some form of supplementary non-farm income, have probably all contributed to reducing the impact of the contract scheme on differentiation processes in the area. It was demonstrated that some centralisation of land ownership is taking place within the Mumias area, with contracted smallholders acquiring land at the expense of non-contracted smallholders. However, as poorer contracted smallholders are also purchasing land, it is unlikely that land ownership will become concentrated in the hands of the larger, more prospero contracted smallholders in the foreseeable future. Neither is it likely that 'true' proletarianisation of non-contracted smallholders will take place in the Mumias area, although it is possible that a financial crisis could give this result. It appears that during the planning stages of the project, the Kenyan government concentrated on the commercial considerations to the detriment of the scheme's development objectives. It would seem that overall development of the area was viewed as an automatic, self-regulating process, thus no problem and conflict identification or planning framework was devised to control or guide the assumed development. The creation of the sugar factory and contracted outgrower scheme at Mumias has released a powerful force for diversified economic and social development in the area. Unfortunately, there is little evidence that the opportunities have been grasped. Development in the area remains monotypic and consequently socially and economically disruptive.