FACTORS DETERMINING CHOICE OF MARKET FACILITATORS BY SMALLHOLDER HORTICULTURAL FARMERS IN LAIKIPIA COUNTY, KENYA

ABSTRACT
In rural areas particularly arid and semi-arid lands (ASALs), smallholder farmers produce mainly under subsistence system due to poor access of market. Farmers in ASALs particularly in Laikipia County depend on horticultural crop production for their livelihood and as a major source of income and rural employment. The purpose of the study was to determine factors influencing choice of market facilitators and their impact on smallholder horticultural farmers’ livelihood. Primary data was collected using structured questionnaires to contact 396 respondents through employment of multi-stage sampling procedure. Descriptive statistics and propensity score matching model were used to analyze the data. From the study it was shown that most farmers used traders while marketing their produce, radio and television to access market information. Gender and distance to output market had a positive significant influence on choice of market facilitators by smallholder farmers. In addition, it was shown that household size, age of household head and marketing through a group positively influenced choice of market facilitators. On the other hand, number of members in the group, access to market information, purpose of farming and amount of output produced negatively influenced choice of market facilitators by smallholder farmers. The findings also indicated that, farmers who involved market facilitators had slightly higher income, than those who marketed their produce independently. The study recommends that to effectively link smallholder farmers to market: governmental organization ought to play a bigger role in disseminating extension services and market information on output price and market availability also infrastructure should be improved especially roads networks in rural areas. In addition, policy makers and government institutions should formulate laws that will enable successful linkage of farmers to the market, through frequent extension services and farmer training services.

CHAPTER ONE 
INTRODUCTION 
Background information 
Agricultural sector accounts for 26% of gross domestic product (GDP) directly and 25% indirectly (GoK, 2010). Over 50% of produce marketed is mainly from smallholder farmers (GoK, 2005). About 85% of farmers in rural population are smallholder and characterized by holding land of less than five acres (Omiti et al., 2009). Horticultural crop (fruits and vegetables) production is considered as the main source of income and employment in rural areas. This account for 70% of the total production, 23% of the total foreign exchange earnings and is one of the leading economic earning sectors (GoK, 2006). Horticultural sector contribute 33% of Agricultural GDP, this therefore acts as a major source of food security and household income (GoK, 2010). In addition, it reduces poverty mainly especially in rural areas thus it is one of the major source of agri-business services for example extension services (Brigitte et al., 2009). Smallholder horticultural farmers contribute 55% to 60% of total exported horticultural crops (fruits and vegetables) (HCDA, 2004) and dominates horticultural production (FAO, 2009). Its production is possible with unreliable weather condition and gives higher returns compared to other cash crops (Minot and Ngigi, 2004). 

Market opportunities over the past years in Kenya have changed due to market reforms and globalization. These reforms mainly targeted large-scale farmers and neglected smallholder farmers thus reducing their linkage to output market and leaving them with few financial sources (Kamara, 2004). Urbanization, rising consumer incomes and demand for higher food standards have created new domestic market opportunities which can be utilized by poor smallholder farmers particularly those in arid and semi-arid lands (ASALs), but there is poor linkage to these markets (Best et al., 2005). Smallholder horticultural farmers in rural areas are then likely to market their products at farm gate level at unfavorable low price; reducing income from the farm due to poor market linkage (Robbins, 2000). 

A study by Chowdhury et al. (2005) revealed that barriers to market access include information asymmetry, transport, communication costs, policy induced barriers, social and non-economic factors and in rural areas; distance to the market and provision of standardized products to the market on a continuous basis (Gulati et al., 2007). Inaccessible product markets contributes to poor market performance and is likely to prevent farmers from taking advantage of new market opportunities; high output price and steady supply to the market (Omiti et al., 2006). Smallholder farmers are likely to be limited to unstable spot markets when there is weak marketing institutions and poor marketing strategy forcing them to produce under subsistence system (Shanoyan et al., 2012). Shepherd (2006) noted that, agricultural production should be linked with market demand and farm level activities should be looked at within the context of the whole supply chain and linkage within the chain. Presence of imperfect markets and limited institutions which support marketing functions, liberalization strategies were bound to fail in integrating smallholders in less-favored areas into high value output markets (Shiferaw et al., 2009). In a situation of limited markets and pervasive rural market, imperfections in inputs and output markets, producer organization, collective marketing groups and market facilitation through market facilitators provide alternative marketing mechanisms. This will enhance market oriented production and enhance technologies in linking smallholder farmers to output markets and raise market participation and commercialization of smallholder production. 

Market facilitators help smallholder farmers’ access input and output markets and participate in those markets. Choice of market facilitators by smallholder farmers’ and their participation in marketing activities is likely to be influenced by economic factors such as reduction in transaction costs and payment period. Non-economic factors such as forming trust based relationships with consumers and market facilitators (Louw et al., 2006). In addition, they are likely to provide market information especially on output price and available markets. Smallholder farmers are then enabled to forecast, plan and produce efficiently (Mundy and Sultan, 2001) and reduce marketing risks (Robbins, 2000), thus helps them to decide on what to produce, choice of marketing strategies and technologies to use in production (Mukhebi et al., 2007). 

Market facilitators coordinate smallholder farmers to access input and output markets that include; private firms, individual sponsors, government run schemes and non-governmental organization who mainly undertake market facilitation particularly in ASALs. These areas are preferred mostly due to their irrigated horticultural products (GoK, 2001). This study therefore sought to identify the effects that market facilitators have on smallholder farmers particularly in arid and semi-arid lands at farm level. Appropriate understanding is then concluded on ways to link smallholder farmers to output high value market especially to the government, agricultural stakeholders and donors. 

Statement of the Problem 
Smallholder horticultural farmers in Arid and Semi-Arid lands (ASALs) are poor and lack access to markets, producing mainly for subsistence. Access to markets particularly in ASALs areas is likely to benefit farmers by increasing their income. Smallholder farmers do not have access to markets mainly due to poor linkage to output market and presence of market information asymmetry. There is inadequate information on high value markets for output produce and prices at the markets. Market linkage involves linking farmers to high value markets and provides them with information on output prices, in order to take advantage of emerging market opportunities. Market facilitators mainly link smallholder farmers to the market. Presence of market facilitators is likely to benefit smallholder farmers in coordinating the movement of output product to market and also provide access to farm inputs and this is likely to have marginal effect on their income. There is scarce information on those factors that influence smallholder farmers in their choice of market facilitators despite their participation in marketing activities and their impact on farm income. The study therefore sought to distinguish farmer’s characteristics with respect to their choice of market facilitators, determine factors influencing choice of market facilitators by farmers and evaluate the effect of market facilitators on farm income among smallholder farmers in Laikipia County. 

Objectives 
General Objective 
The broad objective was to assess the contribution of market facilitators on smallholder horticultural farmer’s livelihood and welfare in Laikipia County, Kenya 

Specific Objectives 
i. To distinguish smallholder farmer’s characteristics with respect to choice of market facilitators in Laikipia County. 
ii. To determine factors influencing choice of market facilitators by smallholder farmers. 
iii. To evaluate the effects of market facilitators on smallholder horticultural farmers’ income. 

Research Hypotheses 
i. There are no distinct characteristics relating to smallholder farmers and their choice of market facilitators. 
ii. There are no significant factors influencing choice of market facilitators by smallholder farmers. 
iii. Market facilitators have no significant effect on smallholder farmers’ income. 

Justification 
Market access is of primary importance to most rural households in eradication of poverty (IFAD, 2003). In rural areas particularly ASALs their main economic activities are livestock production and horticultural crop production (mainly fruits and vegetables). Access to market by horticultural crop farmers in ASALs has an effect on their income. To achieve the Millennium Development Goals of halving people living in absolute poverty especially in rural areas by the year 2015; linking smallholder farmers to output and input markets is the best strategy (World Bank, 2007). Market linkage is likely to be constrained by farm characteristics (distance to the market, farming experience and asset owned) and market related factors (time taken to reach the market, access to market information and credit facilities). With improving linkage to the market, smallholder farmers are likely to increase farm productivity and thus raise their welfare. This forms a basis of transforming from subsistence farming system to commercial agricultural production. In addition, linking smallholder farmers to markets and confronting those constraining factors act as an incentive in raising farm efficiency, farm income and creating employment in rural areas and therefore help in attaining Kenya’s Millennium Development Goals and vision 2030. This study is vital in informing the government, donors and policy makers while making the necessary supportive measures to link smallholder farmers to input and output markets. Market linkage studies assist in revealing the contributions that market facilitators have on agricultural production, marketing, farm income and enable the government in development planning. The study provides information on factors influencing smallholder farmers on their choice of market facilitators, which is essential to policy makers while developing policies that assist in linking smallholder farmers especially in rural areas to the market. The study also contributes to the body of literature existing since many studies carried out on market linkage concentrated on ways and benefits of linking farmers to the market while paying little attention on the influence that facilitators have at farm level. 

Scope and Limitation of the Study 
The study was conducted in Laikipia County, among smallholder horticultural farmers. The scope of the study was to examine the effects that market facilitators have on smallholder horticultural farmers in ASALs areas particularly in Laikipia East Sub-County. The data on farm and marketing characteristics was collected from smallholder horticultural crop farmers in the District. 

Definition of Terms 
Market facilitator - These are organizations and consultants whose sole or primary responsibility is to handle marketing functions for example providing market information on input and output markets (Thinah, 2010). 

Market linkage - It refers to any market related activity which promotes the sale of produce and entry into a market (Key et al., 2000). 

Bonding social capital - It is connectedness between close people who wants to achieve a common goal. It builds strong ties, but can also result in exclusion of those who do not qualify, (Schuller et al., 2000) 

Bridging social capital - It is characterized by asymmetric feelings of connectedness that exist between heterogeneous groups i.e. smallholder farmer and market facilitator these are likely to be more fragile, but more likely also to foster social inclusion (Schuller et al., 2000). 

Smallholder farmer - Small holder farmers are refered to in literature as smallscale farmers, peasant farmers, resource-poor farmers, subsistence farmers , food deficit farmers and emerging farmers (Thinah, 2010) Output market access - It refers to ability to sell all the marketable output at the right time and at the expected price.

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Item Type: Kenyan Project Material  |  Attribute: 68 pages  |  Chapters: 1-5
Format: MS Word  |  Price: KSh900  |  Delivery: Within 30Mins.
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