EVALUATION OF EFFECTS OF VALUE ADDITION IN SWEET POTATOES ON FARM INCOME AND PROFIT MARGINS IN HOMA BAY COUNTY, KENYA

ABSTRACT
Homa Bay County has great potential in terms of the existing arable land, availability of water, human resources base, technological options as well as market growth opportunities. A majority of household engage in fishing and agriculture as a source of livelihood with previous studies indicating that an estimate of 60% engage in sweet potato production. Kasipul, Kabondo Kasipul and Ndhiwa sub-counties have a high potential for sweet potato production. However the abundant production has not translated much into better living conditions by improving incomes as the poverty level in the county still exceeds 50%. Sweet potato value addition has the capability of fetching higher prices from the market. This study therefore established the activities of value addition being practiced in the three sub- counties, the prices of end-products, the marginal effects that value addition had on net income from sweet potatoes and the profit margins along the sweet potato value chain. Multi Stage sampling procedure was used to select 200 respondents. Interview schedules and observation method were used in the collection of data. Data was analyzed using STATA and SPSS computer programs. Descriptive statistics, chi-square test of independence, F-test, multiple regression model and profit margin analysis were used in analyzing the objectives. Results showed that majority of the farmers were involved in cleaning, sorting, grading and packing raw tubers as a form of sweet potato value addition. The prices of end-products of value addition were increasing with the level of value addition. The findings also revealed that the acreage under production, levels of value addition, access to training and transportation costs significantly influenced farm income from sweet potatoes. The profit margins were found to be higher for shorter distribution channels along the value chain. From these findings, the policy makers should encourage farmer group formation to enhance training on value addition, prices and market opportunities. In addition, the study recommends formation of more SACCOs through which farmers can acquire better vines for higher levels of value addition at subsidized prices and ready market for their produce.

CHAPTER ONE 
INTRODUCTION 
Background Information 
Sweet potato is among the world‟s most important, versatile, and underexploited food crops. It currently ranks as the world‟s sixth most important food crop on a fresh weight basis. More than 105 million metric tons are produced globally each year; 95 % of which is grown in developing countries (FAOSTAT 2009). In these developing countries it ranks as the fifth most important food crop after rice, wheat, maize and cassava (ibid). Globally it is cultivated mostly in Asia Pacific countries such as China, Papua New Guinea, and Vietnam among other areas. In Africa it is produced in countries such as Angola, Madagascar, Malawi, Mozambique, Nigeria, Zambia, Uganda and Kenya. Sweet potato is one of the most widely grown root crops in Sub Saharan Africa covering around 2.9 million hectares with an estimated production of 12.6 million tons of roots in 2007 ( FAOSTAT, 2008). It is predominantly grown in small plots by poorer farmers‟ hence it is known as the „poor man‟s food‟ (Woolfe, 1992). Yields of sweet potato per unit of land vary widely, from over twenty- five tons per hectare in high-input agricultural systems to below three tons per hectare where sweet potato is grown as a subsistence crop with minimal use of fertilizers or other inputs, mostly in Africa. 

In Kenya sweet potato is mostly grown in Kakamega, Bungoma, Busia, Homa Bay and Kisii counties. It is also grown to a small extent at the coast and in central regions. The potential of sweet potato contribution to food security, increased incomes and reduction of nutritional deficit is considerable and is yet to be fully exploited in developing countries (Woolfe, 1992). Nyanza region is among the highest sweet potato growing areas in Kenya with Homa Bay County being the principal source. Additionally, sweet potato is an important traditional crop that is grown customarily by small scale farmers both for domestic and commercial purposes. The crop has a relatively high yield potential that may be realized within a short growing season of between three to five months. It is a drought tolerant crop and has a wide ecological adaptation. 

Most sweet potato varieties require low or non-use of external inputs. Moreover, the ability of the crop to establish ground cover fast enables suppression of weeds, control of soil erosion and maintenance of soil fertility. As such, it is an attractive crop for Kenya's farming systems. 

The production of sweet potatoes in Homa Bay County is greatly enhanced by conducive conditions including sandy loam soil, and an abundant almost continuous rainfall pattern. Farmers are therefore able to realize two to three crops per year. The crop is either planted as pure stand or relay cropped with maize. The most important variety grown is Enaironi. This white skinned variety has desirable characteristics to both farmers and consumers. These include short maturity period (3 to 4 months), high yields, moderate stability after harvesting (up to 7 days) and an attractive yellow flesh. In some cases this variety receives higher prices than other varieties in the market. Kanchwere is the second most important variety grown. The tuber has a red skin and yellow flesh and matures within 6 to 7 months after planting. After maturity the tubers can retain their quality for a further 3 to 6 months when left unharvested. This variety is therefore suitable for cultivation for home consumption where sequential or piece meal harvesting is desirable, in order to extend the supply of fresh potatoes. The variety is also suitable for marketing as it can store relatively well (up to 2 weeks) after harvesting. 

Many raw commodities have intrinsic value in their original state. Value addition is the process of changing or transforming a commodity from its original state to a more valuable product. For sweet potatoes, value addition may take various forms. It can be boiled, roasted, fried, creamed or baked in their skins (Tewe et al., 2003). They are combined with both sweet and savory dishes. In addition other products such as sweet potato vine can be a valuable source of green fodder and lasts throughout the off-season. The tubers as well form an industrial raw material for the production of starch, alcohol, and pectin. On-farm processing of sweet potato in Homa Bay has picked up with a majority of the processors being members of women groups. These groups have been trained on the processing technologies by specialist in home economics. Examples include the Kinda Women Group with a processing site in Rangwe and the Allendu Women group, (Owuor, 1996). ADS-Nyanza is a faith- based organization working in six counties in Nyanza region to implement a sweet potato value chain upgrading project. The aim is to increase farmers‟ income levels from sweet potatoes by improving production and marketing of the product in Kabondo area of Homa Bay County,(ADS-Nyanza, 2002). The kind of value addition activities include grinding sweet potatoes into flour which can be mixed with sorghum to make porridge. Mild alcoholic beverages can be made from peeled, chopped, pounded and fermented sweet potato. Such processing is only done when there is a surplus. 

In many areas of the county, sweet potato flour is used in making chapatti, mandazi, crisps and in making any type of baked food such as breads, cookies and muffins or can be fried to obtain potato chips. However, sweet potato value addition can be done in three levels: 

Level 1 - Post-harvest level/primary processing: this involves proper cleaning with water, sorting according to size and extent of damage, grading and packing sweet potato raw tubers for sale. This group of activities does not require training to be performed and hence most households easily carry them out. 

Level 2 – Secondary/ basic processing: this includes steaming, boiling or roasting the raw tubers. In addition it includes slicing, chipping, drying and grinding sweet potatoes to get flour. All these processes may be followed by packing. 

Level 3 - High end processing: involves activities such as frying sliced root tubers to obtain potato chips, noodles, candy, desserts. In addition it involves baking bread, buns, doughnuts and cakes using sweet potato flour, preparing mandazi and chapatti using the same ground flour or blending the boiled tubers to make sweet potato juice. This level also involves the actual packaging of processed sweet potato products, branding, and marketing. 

Initially, the utilization of sweet potato in the County was to consume by either chewing raw or boiling the tubers to act as breakfast meal. However with the vibrant introduction of low cost value addition techniques by Non- governmental organizations, farmers have gradually incorporated other activities of value addition. Value addition trainings have played a major role in educating farmers on the nutritional benefits, food security and improvement in income resulting from adding value to the raw tubers. 

Statement of the problem 
Over the years, previous studies have advocated on the benefits of adding value to primary agricultural products with a forecast that this may intensify production and lead to higher incomes to farmers. To achieve this, County government through the strategic Plan (Homa Bay County 2013-2023) has resolved to use the value chain approach to identify possible interventions through a participatory and iterative process to encourage value addition techniques as a way of enhancing rural incomes. While a majority of farmer groups have been trained on low-cost value addition technology, it is generally assumed that they produce the three levels of value addition end-products and fully engage in the market. However, it has not been empirically established to what extent the farmers‟ are actually involved in value addition activities and the effects these activities have on net prices and consequently farm income. This study aimed at filling this knowledge gap. 

Objectives of the study 
The general objective was to contribute to the existing body of knowledge on the effect of sweet potato value addition on farm income in Homa Bay County. 

Specific objectives 
1) To establish the actual levels of value addition activities in sweet potatoes practiced. 
2) To determine the net prices of products generated from sweet potatoes‟ value addition activities 
3) To determine the effect of different levels of value addition activities on net sweet potato income of farmers. 
4) To analyze the profit margins at different levels in the sweet potato value chain. 

Research Questions 
1) What are the different levels of value addition activities in sweet potatoes practiced? 
2) What are the net prices of sweet potato value added products? 
3) Do different value addition activities influence net income margins from sweet potatoes for farmers? 
4) What is the profit spread of margins among actors along the sweet potato value chain? 

Justification of the Study 
Uncertainty in weather patterns and the existing market potentials has led most farmers in Homa Bay County to diversify their production from maize and beans to other industrial crops such as sweet potatoes. Due to its benefits especially on its potential to improve farmer incomes, a study of this nature is imperative. It brings to the fore the needed information that will enable farmers to make rational decisions with respect to production and value addition. Consequently, an improvement in the level of farmers‟ income will impact positively by reducing the poverty level which stands at above 50% as per the statistics in the county‟s strategic plan 2013-2023. 

Scope and Limitation 
The study was confined to Homa Bay County and specifically to small scale sweet potato producers. Therefore the interpretation of the results may not to be used as a reflection of the impact in other regions where sweet potatoes are produced. In addition, the study focused on analyzing the differences in income due to different value addition activities in sweet potatoes. Lack of proper record keeping by some small scale farmers due to illiteracy was a hindrance to acquisition of perfectly accurate data. 

Definition of Terms 
Smallholder farmers- Refers to farmers with land holdings of less than five acres. 

Value Addition techniques- Value addition is the process of changing or transforming a product from its original state to a more valuable state .Value added refers to the additional value created at a particular stage of production or through image and marketing. Value added agriculture is a process of increasing the economic value and consumer appeal of an agricultural commodity. It is an alternative production and marketing strategy. 

Sweet Potato Value Chain- Refers to the full range of activities which are carried out from conception, through the different phases of production, transformation, and delivery to final consumers. It is also defined as a “set of interventions by chain actors (producers, buyers, processors) and/or service providers to generate higher value added and create win-win relationships among several chain actors”. 

Profit margin – It refers to one of the profitability ratios calculated as net income divided by revenue. Net income or net profit is determined by subtracting all expenses from total revenue. Profit margins are expressed as a percentage.

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Item Type: Kenyan Project Material  |  Attribute: 61 pages  |  Chapters: 1-5
Format: MS Word  |  Price: KSh900  |  Delivery: Within 30Mins.
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