Strategies to Promote Market-Oriented Smallholder Agriculture in Developing Countries: A Case of Kenya

Abstract

Smallholder Agriculture is key to livelihoods of many rural households in developing and transition economies. In Kenya, small farms account for over 75% of total agricultural production and nearly 50% of the marketed output. Despite favourable trends in global development drivers such as rising population, per capita incomes and emerging urban dietary preferences, most smallholder farmers remain poor. This study sought to characterize agricultural commercialization trends, identify and prioritize constraints to participation in markets, analyse determinants of percentage of output sold, and explore strategies to promote market-oriented production. A participatory Rapid Rural Appraisal approach, household survey and a Truncated Regression model were used. A sample of 224 farmers: 76 of them growing maize, 77 involved in horticulture (kales and tomatoes) and 71 practising dairy, were interviewed in one peri-urban and one rural district (Kiambu and Kisii, respectively). Results show that in rural areas, lower levels of output are sold and fewer farmers participate in markets compared to the peri-urban areas. Opportunities for profitable commercial agriculture are observed in growing demand, emerging food preferences and intensive farming. At village-level, market participation is hampered by poor quality and high cost of inputs, high transportation costs, high market charges and unreliable market information. At the household-level, the determinants of percentage of output sold are producer prices, market information arrangement, output, distance to the market, share of non-farm income and gender. Strategies are suggested to improve rural input supply, institutional and regulatory framework, enhance value addition and strengthen market information provision.