Contract farming and outgrower schemes in Kenya: comparative analysis

Abstract

This paper presents a comparative analysis of smallholder outgrower schemes in Kenya for sugarcane, tea, tobacco, sunflower, sweetcorn and French beans. Based on micro- and macro-level criteria, the tea, tobacco, sugarcane and French beans schemes performed better than the others examined. Constraints to replicability of the successful schemes are identified as lack of skilled managers and technicians to manage and operate schemes efficiently, high cost of penetrating into high-value export markets, poor infrastructural development in some production areas, international and domestic market conditions giving rise to low and unstable returns to scheme management and farmers, high cost of training and communication with unskilled outgrowers. Policy implications of the study include the need to streamline production and marketing systems, introducing insurance schemes to protect outgrowers against production and marketing risks, encouraging increased participation by farmers in the schemes' policy and implementation, coordinating scheme management and government activities to minimize duplication and strengthening the legal framework for the schemes by introducing a Contract Farming Act.