Institute for Development Studies, University of Nairobi

This paper examines economic differentiation among peasant households in two adjacent eco-zones of Embu District. One is a high potential, high density coffee growing area and the other a medium potential, lower density cotton growing area. Cash crop production is far more extensive and rural markets considerably better developed in the coffee zone than in the cotton zone. Two sets of factors contribute to greater wealth differences in the cotton zone than in the coffee zone. First, cash crop income levels are considerably lower in the cotton zone and the poorest households tend to be worse off than the poorest group in the coffee zone. Second, key differences in the structure of off-farm income in the two zones mean that the wealthiest cotton zone residents tend to be better off than the wealthiest coffee zone residents. Despite a significant difference in agricultural potential and cash crops in the two zones, it is not agricultural production but non-agricultural income which appears to be the more important agent of economic differentiation. Off-farm income has contributed to the emergence of a different type of wealthy group in each of the two zones. Many of the wealthiest households in the cotton zone tend to have significant off-farm income in the form of wage employment. Wealthy households in the coffee zone, on the other hand, tend to have off-farm income in the form of small businesses rather than permanent wage employment.