Technical Efficiency, Profitability And Market Diversity Among Smallholder Tomato Farmers In Kirinyaga County

ABSTRACT

The horticultural sub-sector in Kenya contributes immensely to the country’s development agenda. Particularly, vegetables are crucial in poverty alleviation with tomato production ranking among the most vibrant enterprises. The crop creates employment and is a source of income for smallholders in rural areas. Despite its potential, tomato production faces major challenges including unreliable markets, low adoption of modern production systems and production inefficiencies. This has been attributed to lack of adequate and reliable information to guide producers on measures of improving productivity through cost effective production systems and efficient markets systems. As a result, this study sought to evaluate technical efficiency, profitability and market diversity among smallholder tomato farmers in Kirinyaga County. The study applied a cross sectional survey design through multistage stratified and probability proportionate to size sampling procedures. Primary data were collected by administering structured questionnaires to a sample of 384 smallholder tomato farmers. Descriptive statistics were used to analyze socioeconomic characteristics and results revealed that majority of the respondents were males with the youth forming a large proportion. In addition, results revealed that respondents were moderately experienced and had adequate information regarding markets. The stochastic frontier production function of the Cobb Douglas form was used to estimate efficiency while Tobit regression model was applied to identify farm and farmer characteristics that influence technical efficiency. Results showed an average technical efficiency of 39.55% among respondents with greenhouse farmers being more technically efficient than open field farmers. This indicated that there is a possibility of improving technical efficiency by 60.45% through better utilization of resources and technologies. Household size, production systems, seed type and fertilizer were significant and positively influenced technical efficiency while land size had a negative and significant impact on technical efficiency. The input-output relationship showed that area under tomato cultivation and the quantity of fertilizer used were significant and positively influenced tomato yield. The profitability of both green house and open field production systems was evaluated using a combined analyses of gross margin and net profit. The capital recovery factor was applied to determine the amount of initial cost of investment recouped by farmers annually. In addition, the independent sample t-test was used to show the significant variations between costs and profitability of the two systems. Results showed that fixed and variable costs were statistically different while the greenhouse system had better returns compared to the open field system. The Simpsons’ diversity index was used to evaluate the magnitude of diversity and producers had a mean diversity index of 47.71%. This implied presence of an opportunity to improve diversity scores by more than 50 percent if the quantities sold in each market outlet are improved. A one way ANOVA was used to assess connection between market diversity and farm prices. Results revealed that farm prices realized by the smallholder tomato farmers across different marketing outlets were not statistically different despite levels of market diversity being distinct. The study recommends that emphasis should be focused on policies that enhance production of certified seeds and provision of subsidized fertilizers since their continued application increases technical efficiency. In addition, policy interventions aimed at subsidizing costs of establishing greenhouses would serve as an incentive to motivate farmers use technologies in tomato production. Besides, enhancing contract markets would reduce the influence of intermediaries and guarantee market efficiency leading to improved farm prices hence increased returns.