Contract Farming of Coconut in Kwale and Kilifi Counties: Participation and Productivity Analysis

Abstract

Coconut is mainly grown by small scale farmers in coastal Kenya. However, the marketing system is inefficient and the production low and this has hindered farmers from getting optimum benefit from coconut farming. Contract farming in coconut has been introduced since 2006 but it is limited and only a small number of farmers engage in it. This study analyzed coconut contract farming in relation to participation and productivity. It sought to characterize and obtain a better understanding of coconut contract farming, determine factors that influence participation and evaluate the effect of contract choice on productivity and market access. The study was conducted in Kwale County Msambweni division and Kilifi County in Watamu division. Stratified simple random method of sampling was used. The data was collected through formal interviews using a structured questionnaire. The data were analyzed in a comparative approach. Regression models were used to determine factors that influence participation, price and income. The study established significant difference in household demographics between contract and non-contract farmers. The descriptive analysis indicated that contract farmers were more educated, had bigger farms and more coconut trees than non-contract farmers. Unlike the contracted farmers, non-contract farmers had low trust on other farmers. Contract farmers’ price for coconut was 26 percent higher and their average income per tree was 39 percent higher. Regression analysis indicated that price, payment date and level of education of household head were the main factors that positively influenced participation in contract farming. It also established that presence of other sources of income and farmers’ need for credit affected the participation negatively. The study found that contract farming improved farmers’ income and access to market. It should therefore be promoted in coconut farming by developing policies that are enabling.