LABOUR ABSORPTION IN KENYA'S MODERN SECTOR AGRICULTURE

Abstract

This study is intended to provide some insight into the demand for labour in Kenya's Modern Sector Agriculture. Modern Sector Agriculture comprises the small farms which grow some cash crops and the large scale farms. The study focuses on the whole of Modern Sector Agriculture but lays emphasis on the large scale farms. The employment problem facing the country at present is in part a result of a high rate of popu lation growth. An examination of the problem from the supply side is discussed in Chapter I. Kenya's labour force has been growing at a rate in excess of 3 per cent per annum since 1964. The Modern Sector is small and absorbs relatively a small proportion of the labour force. Hence a majority of Kenyans are absorbed in the "trditional sector" as self -employed persons /. j or family workers. However, Agricultural Modernization is taking place in many parts of the country as cash crops are introduced, and many subsistence farmers are brought into the cash economy. Modern Sector Agriculture is therefore expected to play an increasing role as a source of income and employment for many Kenyans. (if i \ l * ; • Employment in Modern Sector Agriculture has not been % growing fast enough particulary in the large scale farms. Infact employment in the large scale farms declined during the i960 - 1970 decade. The break up of some of the large scale farms and the process of Agricultural Mechanization are suggested as the main causes of the decline in employment. Agricultural Mechanization need not result in a decline in the demand for labour, however, since a "Selective Mechanization" can lead to an increase in both output and employment. I have used published data on output, employment and earnings to estimate the demand for labour equations derived in Chapter IV. From the results of these equations (given in Chapter V), I have an estimate of the elasticity of substitution between labour and capital. The elasticity of substitution is small ( on the basis of total acreage), "/ which would indicate a rather low capacity of substituting labour for non-labour inputs, but on per hectare basis, the elasticity of substitution turns out to be quite high indicating that there is some room for substituting labour for non labour inputs, without sacrificing output. The small farms tend to be more labour intensive than the large farms. Thus the author suggests that the Elective Mechanization package be accompanied by measures to break up the large scale farms into smaller units.