Determination of optimal enterprise mix and allocation of resources for West Kano pilot iirrigation scheme

Abstract

Large scale irrigation systems, especially those requiring pumped water, are costly investments and generally require subsidization. Of all the seven large schemes in Kenya, covering 9,000 hectare, only the gravity-fed Mwea Tabere rice scheme has had positive cash flows. The big losses made by these schemes have cost the Hinistry of Agriculture on average, 25 per cent of its total annual budget for the last four years. To reverse this situation and make irrigation schemes productive, it is important that well tested technology and comprehensive plans are prepared. This study was an effort toward such plans. The main objective of the study was to determine an optimal'enterprise mix for West Kano Pilot Irrigation Scheme, which is one of Kenya's large scale irrigation schemes. Determination of such an enterprise mix would help in allocating the available resources optimally and thus maximizing the tenant's income. This is in line with the objectives of the task force set up by the Ministry of Agriculture to look into alternative cost-effective ways of developing Kenya's irrigation potential. Both primary and secondary data were used in this study. Data on inputs, yields, input-output coefficientB and prices was collected between December 1986 and January 1987. Linear programming wa s chosen as the main tool for data analysis.

A slight modification was done on the ordinary linear programming model in order to fully include the perennial sugar cane crop in the analysis. Results from this study showed that it is possible to more than double the incomes received by tentants in this scheme from the present KShs.9,033.30 to KShs.18,484.67 per annum. If the optimal enterprise mix is adopted the scheme can also save more than KShs.3 million per year in operating capital. This was a clear indication that the scheme can contribute positively to the development of the area. The negative cash flows made in the past can actually be halted. The optimal enterprise mix obtained in this study requires that the tenant allocate 1.92 acres of his plot to rice in the short rains, 2.8 acres to green grams in the long rains season and 1.2 acres to sugar cane. With such a farm plan, marketing capacity for sugar cane and short rains land we"re found to be the most limiting resources to crop production in the scheme. Green grams was found to be a very profitable enterprise in the scheme, earning the tenant a gross margin of KShs.5,454 per annum as compared to KShs.5,321 from rice. It is thus recommended that green grams should be added to rice and sugar cane as a third scheme crop.