ANALYSIS OF FARMERS’ PREFERENCES FOR BIOFUEL INVESTMENTS FOR LIVELIHOOD DIVERSIFICATION IN KENYA: THE CASE OF
WESTERN KENYA
Isabel Joy A.Supervisors:
Dr. David Otieno JakindaProf. Willis Oluoch- Kosura
University of Nairobi
CMAAE THESES DISSEMINATION WORKSHOP 24TH – 25TH JUNE, 2014
EGERTON UNIVERSITY, KENYA
OUTLINE
Introduction Problem statement Objectives Results
INTRODUCTION
Poverty continues to be a problem in many countries around the world Approximately 1.2 billion people live in extreme poverty
(UN, 2012 )
Severe among small- scale farmers (IFAD, 2011)
Livelihood diversification could be a possible solution (Rahut and Scharf, 2012)
INTRODUCTION CONT’D Kenyan context-challenges such as high population, land pressure,
low agric productivity, failed markets,
Various forms of off farm diversification have emerged(rural urban migration)
Limited resources to cater for growing population in urban areas (Unwin et al., 2010)
Therefore, other forms of diversification have emerged not requiring rural dwellers to migrate to urban areas
For example, biofuel investments are emerging as an alternative livelihood strategy-promote rural development, alternative market for crops, job creation (Darkwah et al.,2007)
INTRODUCTION CONT’D
Biofuel investments –lease of land, sale of land, providing labor, growing biofuel crops
Kenya is exploring investments of bio fuel production. According to Sessional paper No.4 of 2004, The energy
act,No.12 of 2006 and Biodiesel strategy.
Recent investments towards a proposed biofuel complex aimed at producing fuel ethanol from tropical sugar beet in Western Kenya among other investments.
INTRODUCTION CONT’D
Biofuel investments –lease of land, sale of land, providing labor, growing biofuel crops
However, farmers are not familiar with lease of land for biofuel which could come with a lot of restrictions in terms of land use and access rights that may disrupt rural livelihood patterns
PROBLEM STATEMENT
Persistent poverty in Western Kenya (31.5% hardcore poor)
Biofuel investments are being explored by private companies and government in this region- could serve as a possible alternative livelihood strategy
Lack of empirical insights on whether the investments would fit in the context of the enterprise mix of the farmers in terms of their preferences
PURPOSE AND OBJECTIVES
The purpose of this study was to analyse smallholder farmers’ livelihood strategies and preferences for biofuel investments in Kenya.
The specific objectives were: To characterise farmers’ sources of livelihoods. To analyse farmers’ preferences for biofuel
investments as an alternative livelihood strategy
DATA
Primary data was collected through face to face interviewsCE cards collected data on preferences for
biofuel investments
Sampling procedureMultistage sampling in Bungoma and Kakamega
regions, appliedSelection of the two counties was purposive.
Smaller administrative units was randomly selected.
Respondents were interviewed at household level.
Sample size; 180 respondents in Bungoma and 162 respondents in Kakamega; Total of 342
DATA ANALYSIS Characterization of farmers livelihood
activities Descriptive statistics was done in SPSS (mean, percentages
and standard deviation)
Analysis of preferences for biofuel investments CE was applied through a RPL
DESCRIPTIVE RESULTSVariable Bungoma Kakameg
aPooled
Average land size (acres) 3.12 2.62 2.70
Enterprise mix(%)•Crop farming only(maize and sugarcane) •Crop and livestock farming•Off farm activities
20.649.430
35.240.724.1
27.545.327.1
Challenges(%)•Lack of markets•Low payments•Delayed payments
75.673.672.2
12.350.649.4
45.662.661.4
Average age of household head(years)
47.3 45.7 46.4
Gender of household head (% male) 50 53.1 51.5
Average level of education (years) 9.8 8.8 9.3
Average income(kenya shillings) 4500 4900 4700
Average household size (persons) 7 6 7
Aware of biofuel (%) 51.7 30.2 41.5
Aware of sugar beet(%) 23.3 6.8 15.5
BIOFUEL INVESTMENT ATTRIBUTESATTRIBUTE LEVELS
Contract length 2 years, 5 years, 10 years
Size of land 25%, 50%, 75%
Employment to household members
None, permanent, casual
Renewability of contract Yes, No
Price per acre Kshs 10,000, 15,000, 20,000
RPL MODEL The utility obtained by individual n from
alternative i in choice situation z was specified according (Revel and Train 1998):
Uinz = βn Xinz + εinz
The marginal willingness to accept (WTA), was estimated as (Hanemann, 1984):
WTA=1*(βk/βp)
CE CARDWhich one of the biofuel investments would you choose?
Biofuel Investment
alternative A
Biofuel Investment
alternative B
Neither
Lease contract length
10 years 2 years
Size of land 25% 75%
Employment casual noneRenewability of contract
yes no
Lease price per acre
10,000 20,000
Which biofuel investment would you prefer?
√
RPL ESTIMATESATTRIBUTE BUNGOMA KAKAMEGA POOLED SD
(POOLED)
Short 1.86** 1.68 1.47***
2.43***
Long -3.52***
-13.45** -3.5*** 4.41***
Quarter 4.66*** 13.17** 4.41***
2.99***
3 quarter 2.00 4.97 1.26* 0.27
Permanent 3.74*** 10.34*** 3.54***
3.47***
Casual 2.06*** 8.86** 2.19***
1.77**
Yes 0.95** 0.47 0.91***
1.75***
Price 0.04*** 0.06*** 0.04***
Likhd ratio -336.13 -711.90 -1502
Pseudo R2 0.57 0.59 0.56
WTA ESTIMATES (KSHS)ATTRIBUTE BUNGOMA KAKAMEGA POOLED
SHORT 5,077 2,906 3,869
LONG -9,574 23,272 -9,339
QUARTE 12,654 22,791 11,559
THREEQ 5,446 8,597 3,296
PERMAN 10,161 17,898 9,264
CASUAL 5,618 15,329 5,750
YES 2,587 805 2,390
PREFERENCE HETEROGENEITYATTRIBUTE POOLED SAMPLE SD
SHORT 1.33*** 0.25
LONG -3.62*** 4.57***
QUARTER 5.71** 3.65***
THREEQUA 5.76** 0.66
PERMANEN 4.07*** 1.95***
CASUAL 2.05*** 0.99
YES 0.97*** 2.52***
LONGCRED -4.18** 4.76**
CASLCRED 1.74** 0.96
PERMLAND 0.68** 0.85***
PERMHZS 0.36** 0.13*
LL -752.46
PseudoR2 0.23
POLICY SCENARIOSFARMER CATEGORY ATTRIBUTES
> 75% of monthly income from crop farming only
Short, half, casual, yes
> 75% of monthly income from crop and livestock farming
Medium, quarter, none, yes
> 75% of monthly income from off farm activities
Long, threeqarter, permanent, yes
CS ESTIMATESFARMER CATEGORY BUNGOMA
(Kshs/month/acre)
KAKAMEGA(Kshs/month/acre)
POOLED SAMPLE(Kshs/month/acre)
> 75% of monthly income from crop farming only(short, half, casual, yes)
13,281.7 19,040.6 12,009.8
> 75% of monthly income from crop and livestock farming (medium, quarter, none, yes)
20,858.9 38,925.9 19,699.5
> 75% of monthly income from off farm activities (long, three-quarter, permanent, yes)
6,031.9 3,223.0 3,221.6
POLICY IMPLICATIONS Study focuses on how biofuel investments
companies can target different categories of farmers based on their enterprise mix.
Short contract length, employment to household members and renewable contracts improve farmers’ preferences for biofuel investments
ACKNOWLEDGEMENTS
AERC and GOK
AFRINT III PROJECT
Supervisors : Dr. David Jakinda and Prof. Willis Kosura
Stakeholders
THANK YOU