Analysis of growth of productivity in Kenya’s agricultural sector

Abstract

The study is concerned with agricultural growth and productivity in Kenya between 1960 and 1980. The principal objectives were to dete rmi.ne the rates and sources of growth in output and producti vi ty in economic and physical terms. Two approaches were used. The firs t was growth accounting procedures using Laspeyer's Index and the index fo rmul.a of Divisia. The second approach involved estimation of a Cobb-Douglas production function. Total agricultural output grew at 3 percent per year between 1960 and 19,80. The increase was nos t rapid after 1969, averaging 5 percent both in physical and economic teras. Agricultural inputs increased more rapidly in the first decade before 1969 than after 1969. Total inputs increased at 2 percent per year from 1960 to 1980. Agricultural 18..11d;; farm machinery, the ratio of land to labour, and non-Farm current inputs had declining trends. Ag-ricultural labour increased more or less corrinuous ly at a rate of 2 percent per year. Growth in agr icul tur al output was closely as soc iat ed with product ivity of the pr imary resources than the growth in totalinputs par t icul arly after 1969. Product ivi ty accounted for over 50 percent of t.hc growth in output ,

Prices of agricultural commodities also influence the pattern of production and value of output. Between 1969 and 1980, the prices of export crops and industrial crops were relatively more favourable than the prices for food crops. Export crops increased faster than food crops during this period. Regression analysis, showed that the coefficients for labour and capital were significant at 5 percent level of significance, while the coefficients for land and current inputs were not significant at 5 percent level of significance. Marginal productivity analysis yielded marginal producti vity for labour of K£528 per worker. The marginal product for fertilizer was K£l54 per ton, while those for land and capital were 1\£51 per hectare anJ K.£6 per .£ invested,

respectively. Future growth in agricultural output must come from increased producti vity of the inputs, because growth m inputs, especially land input, has cleclined. The key factor to improvements in land productivity seems to be increased fertilizer use, which has a higher marginal product than land and capital. Increased use of labour rather than capital is also an important factor for future growth in output. In addition, a sound price policy which offers incentives to fanners is another .unpor t ant factor for sustaining rapid output growth in future.