The profitability of small scale pig farmers in Nyeri District Kenya 1977-1978

Abstract

The subject matter of this study is the actual and potential profitability of small-scale pig farms in Nyeri District. Two aspects are therefore analysed - the positive and normative. Firstly an attempt is rnade to analyse enterprises as they are found on the farms. Secondly a linear prograrrming model (Ll?) is used to reorganize enterprises on the farms so that better total gross margins can be obtained by farmers. This analysis helps to show what ought to be done on the farms under stated conditions to max~nize profits. Residual accounting, feed conversion ratios (CR), confidence intervals, gross margins and linear programming represent the main analytical procedures. Two specific hJ~theses are formulated for the study. The first one is that pig production is profitable on small-scale farms in Nyeri District under the current situation. The second states that the profitability of the pig enterprise depends largely on the feed conversion ratio. The residual accounting procedure results indicate that on average farmers did not make a profit on their farms for the year under study when capital investment is taken into consideration. p...s a result farmers on average showed negative labour earnings . On the other hand feed conversion ratio resul.ts showed that when the prevailing feed coriversion ratios are used in the a.nalysis, 46 percent of farmers get negative gross margins for the pig enterprise. However, when the best conversion ratio (1:3.52) that ~~ obtained on the s~~le farms is used, 96 percent of farmers get positive gross ITargin for the pig enterprise. The average pig holding had.a negative gross ~~gin. TI1is is attributable to excessively high operaional costs. Coffee 811erges _as the most profitable crop in both farm size strata in the sample. This is mainly due to the high coffee prices obtained in the boom year, ]97i-;/77. Other reasons that influence the of the pig enterprise and coffee enterprise are fully explored in the An IF model was used in tV,Q analyses. In the first a pig act.ivi t.y wi th negative gross margin that was observed for the sample is included. In the second an improved pig activity with a positive gross margin is used. The pig activity with a negative gross rn.rg in was included so that the opportunt ty cost effect of this activity on the overall opt irna.I program could be assessed, if it ",ere in fact forced in. Of course an activity with a negative gross margin wi Tl not show in an optirnal program. The results of the analysis show that Small-scale pig production is not profitable under the current situation. It can only be profitable if the pig enterprise gross margin increases, particularly through greater feed conversion efficiency, and labour is not a limiting factor. Therefore in the light of these findings h~~thesis 1 mentioned previously is unacceptable while hypothesis 2 can be accepted without reservation. The LP analysis reveals the need to increase land area on the average sized ~~ll farm,and to overcome ~ts seasonal labour constraints. This leads to the important recommendation that ways and means should be found as soon as possible of relaxing the effects of resource constraints on the farms, so as to permit more profitable organization. In order to ensure that farmers achieve high levels of efficiency in small-scale pig production, continuing socio-economic research is necessary, especially at the f~~ level, to keep farmers informed about the best ways of combining resources and enterprises under their present conditions, reflecting more profit role resource combinations.