The supply responsiveness of wheat farmers in Kenya

Abstract

The major objective of the study was to show how wheat farmers respond to price incentives in Trans-Nzoia,Uasin Gishu, Nakuru, Narok and Nyandarua districts in Kenya. The Prices included in the analysis are the annual and one-year lagged prices of wheat and other competing enterprises in each district. Wheat yield variable and average rainfall distribution for each district are incorporated. Time series data from 1964 to 1983 collected from various sources were analyzed separately per district using the Nerlovian Partial Adjustment model. The results show that most farmers in the districts studied except Narok show a positive response to annually announced wheat prices. The rainfall variable appeared insignificant in most of the districts while wheat yield variable showed strong statistical significance in all districts. Kenya is a high cost producer of wheat and the evolvement of high-yielding varieties of wheat may reduce the cost per hectare. Fragmentation of the former large scale wheat farms to settle the landless is probably one of the major causes of wheat hectarage decline. If wheat can be grown successfully by small scale growers, perhaps further decline in wheat hectarage may stop. Finally, keeping the domestic wheat price above that of world wheat market protects the high marginal cost producers of wheat who should use their limited resources in growing other crops where they have better comparative advantage.