Indicators of Value Added Agri-Businesses on Small Farms in Kenya: An Empirical Study of Kiambu and Murang’a Counties

Citation:
O LK, M MO, J NF. "Indicators of Value Added Agri-Businesses on Small Farms in Kenya: An Empirical Study of Kiambu and Murang’a Counties." Journal of Small Business and Entrepreneurship Development. 2014;vol.2(No.3 & 4):89-101.

Abstract:

Kenya is ranked among the top ten largest economies in Africa and bearing the tag
of middle income. This tag should motivate the country to have food security but
this does not seem to be the case as many small farmers, who are the backbone of
the economy, are not adding value to their agricultural produce. Adding value is an
entrepreneurial process that creates wealth for both the farmers and the country.
This study investigated the factors that influence value addition on small farms in
Kenya. The study employed a cross-sectional survey design and a multi-stage
sampling technique where 15 locations from Kiambu and Murang’a counties were
identified. 388 farms were selected by line transect technique for this study.
Descriptive statistics was used to estimate the extent of value addition in agribusinesses
on small farms. Linear Probability Model (LPM), Logit, and Probit
models were used to estimate the determinants of value addition on the small farms.
The study reveals that kenya’s agrarian economy is suffering from limited value
addition as the statistics show that 6% of small farmers add value to their
agricultural produce. It was discovered that farm sizes are negatively correlated with
value addition. The distance to the market and accessibility to loan facilities were
found to be the major determinants of value addition in Kenya. The study
recommended that the government should create rural markets for the farmers and
facilitate financial institutions to lend money to small farmers at reasonable interest
rates. Small and Micro Enterprises should be encouraged to play an active role of
value addition in the agri-businesses of the Kenyan middle-income economy.

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