Farmers’ Participation in Factory Contracted Services and its Effect on Profitability among Smallholder Sugarcane Farmers in Malava Sub-county in Kenya

Abstract

Sugarcane crop is among the industrial crops that are major employers and contributors to the Kenyan economy. In a bid to attain self-sufficiency in sugar, Kenya has made remarkable efforts to develop sugarcane subsector. However, sugarcane productivity is still low compared to its potential yield. For a long time, this crop has been grown through contract farming. This study aimed at evaluating the effect of participation in factory contracted services on the profitability of smallholder farmers in Malava Sub-county in Western Kenya. Primary data were collected using structured questionnaires from a sample of 384 farmers using systematic random sampling and proportional sampling allocation techniques. Analysis of variance was applied to determine if there is a significant difference between profitability of contracted and non-contracted farmers. The effect of contracted services on profitability among contract farmers was analyzed by multiple linear regression. The results showed that contracted extension, labour and credit services have significant effect on farmers’ gross margins. Based on the results, the study recommended the Kenyan government to formulate policies that enhance provision of contracted extension, labour and credit services. The need for a review of the existing contract engagement terms among sugarcane farmers is also evident in this study.