COMMERCIALIZATION EFFECTS ON HOUSEHOLD INCOME, POVERTY, AND DIVERSIFICATION: A COUNTERFACTUAL ANALYSIS OF MAIZE FARMERS IN KENYA

John Olwande and Melinda Smale ()

No 170028, 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota from Agricultural and Applied Economics Association

Abstract: High poverty rate persists in rural Kenya, where farming households continue to depend on agriculture for food and income, despite economic growth. Maize is the most widely grown crop, with the maize-growing smallholder population quite heterogeneous and diversified.However, less than half the growers enter the market to sell at least a portion of their harvest.Our objective in this paper is to test the effects of maize market participation on household income, poverty status, and income diversification among Kenya’s smallholder maize growers. We employ a combination of propensity score matching and endogenous switching regression on household panel data covering a ten-year period. The propensity score matching results show that in the overall, participation in the maize market has a significant impact on household income and poverty, with the magnitude of impact estimates differing across segments of maize growers, while the impact on diversification of income sources is not significant in most cases. These results persist after controlling for hidden selection bias through endogenous switching regression, with the impact estimates larger. Heterogeneity effects attest to existence of underlying differences among the maize-producing households that make sellers better off than non-sellers regardless of participation in the maize market. Our findings reinforce the call for interventions to expand the capacity of smallholder maize farmers to produce for the market in efforts to raise incomes and contribute to a more widespread poverty reduction.

Keywords: Agribusiness; Agricultural and Food Policy; Food Security and Poverty; International Development; Marketing (search for similar items in EconPapers)
Pages: 50
Date: 2014-05
New Economics Papers: this item is included in nep-afr, nep-agr and nep-dev
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea14:170028

DOI: 10.22004/ag.econ.170028

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