IDEAS home Printed from https://ideas.repec.org/p/ags/aaae13/161470.html
   My bibliography  Save this paper

Off-farm Income and Fertilizer Investments by Smallholder Farmers in Kenya

Author

Listed:
  • Mathenge, Mary K.
  • Smale, Melinda

Abstract

Nonfarm earnings from diverse sources account for a substantial and growing share of household income among smallholder farmers in many areas of Sub-Saharan Africa, but information about the effects of these earnings on farm investments is relatively sparse. This study focuses on fertilizer investments given the importance of soil fertility in raising crop productivity, the central role of fertilizer in most recommendations for managing soils, and the high cash cost of fertilizers. We use panel data from a sample of roughly 1200 smallholder farmers in Kenya to estimate input demand for fertilizer, testing the effects of off-farm income, as well as nonfarm income, income from labor on other farms, and all off-farm income combined. We compare effects among three types of crops: a major food staple (maize), and emerging cash crop (vegetables), and traditional export crops (coffee/tea). Demand functions are estimated with double hurdle regression, a Control Function approach to handle potential endogeneity of off-farm income, and Correlated Random Effects to treat time-invariant heterogeneity. We find that, holding prices, other crops grown, locational and relevant household characteristics constant, off-farm earnings have a negative impact on fertilizer use on both staple and emerging cash crops in Kenya, and a weak, positive effect on traditional cash crops. Nonfarm income explains most of this pattern, although the effects of labor on other farms are evident in the case of vegetables, which are relatively labor-intensive throughout the growing season. Results have implications for public investments in rural development as smallholders commercialize in Kenya.

Suggested Citation

  • Mathenge, Mary K. & Smale, Melinda, 2013. "Off-farm Income and Fertilizer Investments by Smallholder Farmers in Kenya," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161470, African Association of Agricultural Economists (AAAE).
    • Handle: RePEc:ags:aaae13:161470
    DOI: 10.22004/ag.econ.161470
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/161470/files/Mary%20K.%20Mathenge%20and%20Melinda%20Smale.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.161470?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318, Elsevier.
    2. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    3. Bezu, Sosina & Barrett, Christopher B. & Holden, Stein T., 2012. "Does the Nonfarm Economy Offer Pathways for Upward Mobility? Evidence from a Panel Data Study in Ethiopia," World Development, Elsevier, vol. 40(8), pages 1634-1646.
    4. Papke, Leslie E. & Wooldridge, Jeffrey M., 2008. "Panel data methods for fractional response variables with an application to test pass rates," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 121-133, July.
    5. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-685, May.
    6. Marenya, Paswel P. & Barrett, Christopher B., 2007. "Household-level determinants of adoption of improved natural resources management practices among smallholder farmers in western Kenya," Food Policy, Elsevier, vol. 32(4), pages 515-536, August.
    7. Marenya, Paswel Phiri & Barrett, Christopher B., 2009. "The effect of soil quality on fertilizer use rates among smallholder farmers in western Kenya," 2009 Conference, August 16-22, 2009, Beijing, China 51671, International Association of Agricultural Economists.
    8. Benjamin Davis & Gero Carletto & Paul Winters, 2010. "Migration, Transfers and Economic Decision Making among Agricultural Households: an Introduction," Journal of Development Studies, Taylor & Francis Journals, vol. 46(1), pages 1-13.
    9. Paswel P. Marenya & Christopher B. Barrett, 2009. "Soil quality and fertilizer use rates among smallholder farmers in western Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 40(5), pages 561-572, September.
    10. Benjamin Davis & Paul Winters & Thomas Reardon & Kostas Stamoulis, 2009. "Rural nonfarm employment and farming: household‐level linkages," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 119-123, March.
    11. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, vol. 26(4), pages 315-331, August.
    12. Bryceson, Deborah Fahy, 2002. "The Scramble in Africa: Reorienting Rural Livelihoods," World Development, Elsevier, vol. 30(5), pages 725-739, May.
    13. Mathenge, Mary K. & Tschirley, David L., 2008. "Off-Farm Work and Farm Production Decisions: Evidence from Maize-Producing Households in Rural Kenya," Working Papers 202609, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    14. Ahituv, Avner & Kimhi, Ayal, 2002. "Off-farm work and capital accumulation decisions of farmers over the life-cycle: the role of heterogeneity and state dependence," Journal of Development Economics, Elsevier, vol. 68(2), pages 329-353, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mathenge, Mary K. & Smale, Melinda & Opiyo, Joseph, 2013. "Off-farm Work and Fertilizer Intensification among Smallholder Farmers in Kenya: A Cross-Crop Comparison," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150638, Agricultural and Applied Economics Association.
    2. Smale, Melinda & Mathenge, Mary K. & Opiyo, Joseph, 2015. "Nonfarm Work and Fertilizer Use Among Smallholder Farmers in Kenya: A Cross-Crop Comparison," Working Papers 206441, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    3. Smale, Melinda & Kusunose, Yoko & Mathenge, Mary K. & Alia, Didier, 2014. "Destination or Distraction? Querying the Linkage between Off-farm Income and Farm Investments in Kenya," Food Security International Development Working Papers 196829, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    4. Michler, Jeffrey D. & Josephson, Anna L., 2017. "To Specialize or Diversify: Agricultural Diversity and Poverty Dynamics in Ethiopia," World Development, Elsevier, vol. 89(C), pages 214-226.
    5. Mathenge, Mary K. & Smale, Melinda & Olwande, John, 2012. "The Impact of Maize Hybrids on Income, Poverty, and Inequality among Smallholder Farmers in Kenya," Food Security International Development Working Papers 146931, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    6. Mathenge, Mary K. & Smale, Melinda & Olwande, John, 2014. "The impacts of hybrid maize seed on the welfare of farming households in Kenya," Food Policy, Elsevier, vol. 44(C), pages 262-271.
    7. Josephson, Anna Leigh & Michler, Jeffrey D., 2015. "To Specialize or Diversify: Agricultural Diversity and Poverty Persistence in Ethiopia," 2015 Conference, August 9-14, 2015, Milan, Italy 212459, International Association of Agricultural Economists.
    8. Tesfaye Woldeyohanes & Thomas Heckelei & Yves Surry, 2017. "Effect of off-farm income on smallholder commercialization: panel evidence from rural households in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 48(2), pages 207-218, March.
    9. Muyanga, Milu & Jayne, T.S., 2014. "Effects of rising rural population density on smallholder agriculture in Kenya," Food Policy, Elsevier, vol. 48(C), pages 98-113.
    10. Getahun, Tigabu & Fetene, Gebeyehu, 2022. "Determinants of Participation in Rural Off-Farm Activities and Its Effects on Food Shortage, Relative Deprivation and Diet Diversity," Discussion Papers 319328, University of Bonn, Center for Development Research (ZEF).
    11. Tesfaye, Wondimagegn & Tirivayi, Nyasha, 2020. "Crop diversity, household welfare and consumption smoothing under risk: Evidence from rural Uganda," World Development, Elsevier, vol. 125(C).
    12. Stiebale, Joel, 2013. "The impact of cross-border mergers and acquisitions on the acquirers' R&D — Firm-level evidence," International Journal of Industrial Organization, Elsevier, vol. 31(4), pages 307-321.
    13. Lenis Saweda O. Liverpool-Tasie, 2017. "Is fertiliser use inconsistent with expected profit maximization in sub-Saharan Africa? “Evidence from Nigeria”," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 22-44, February.
    14. Burke, William J. & Jayne, Thom S. & Snapp, Sieglinde S., 2022. "Nitrogen efficiency by soil quality and management regimes on Malawi farms: Can fertilizer use remain profitable?," World Development, Elsevier, vol. 152(C).
    15. Fernández-Val, Iván & Vella, Francis, 2011. "Bias corrections for two-step fixed effects panel data estimators," Journal of Econometrics, Elsevier, vol. 163(2), pages 144-162, August.
    16. Sènakpon F. A. Dedehouanou & John McPeak, 2018. "Diversify more or less? Household resilience and food security in rural Nigeria," Working Papers PMMA 2018-01, PEP-PMMA.
    17. Marwan Benali & Bernhard Brümmer & Victor Afari‐Sefa, 2018. "Smallholder participation in vegetable exports and age‐disaggregated labor allocation in Northern Tanzania," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 549-562, September.
    18. Egger, Peter & Keuschnigg, Christian & Merlo, Valeria & Wamser, Georg, 2011. "Corporate Taxes, Internal Borrowing, and the Lending Capacity within Multinational Firms," Economics Working Paper Series 1142, University of St. Gallen, School of Economics and Political Science.
    19. Hassen, Sied, 2018. "The effect of farmyard manure on the continued and discontinued use of inorganic fertilizer in Ethiopia: An ordered probit analysis," Land Use Policy, Elsevier, vol. 72(C), pages 523-532.
    20. Giles, John & Murtazashvili, Irina, 2010. "A control function approach to estimating dynamic probit models with endogenous regressors, with an application to the study of poverty persistence in China," Policy Research Working Paper Series 5400, The World Bank.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaae13:161470. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaaeaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.