ANALYSIS OF WILLINGNESS TO PAY FOR COMMUNITY BASED POTATO COLD STORAGE FACILITIES: A CASE OF SMALL SCALE PRODUCERS IN NAKURU COUNTY

ABSTRACT 
Potatoes are crops that although perishable can be stored easily with minimum loss of quality and quantity. Potato storage in Kenya is not common with the few farmers that practice it doing it traditionally and are therefore exposed to risks and consequently losses. Studies have indicated that the storage of potatoes is a means of protecting farmers from seasonality in supply and price fluctuations constraints. Studies in Tunisia, India, and USA have shown the benefits of potato storage but little has been documented on the willingness of farmers in Kenya to use or pay for specialised potato storage facilities. This study looked into the willingness of farmers to pay for the services offered at these centres as well as elicited the amount they would be willing to pay for the storage. The study used cross sectional data that was collected using predesigned interview schedules. A sample of 207 farmers was used in the study and it was obtained using the multi-stage sampling. The data was analysed and summarised using Excel, Stata and SPSS. Potato farmers in the county were characterised using descriptive analysis. The amount of money the farmers were willing to pay as storage cost was elicited using the Double Bounded Dichotomous Choice Model with the underlying distribution being a probit model. The empirical results indicated that age, education level, role of agriculture to the household, farm size and distance from the main road, access to market information and access to agricultural extension were significant factors at 0.05 confidence level. All of these factors had a positive influence on willingness to pay except age which had a negative influence. The results of the study also indicated that the amount farmers were willing to pay is higher than what the actual fee is. This therefore indicates that the Community based storage facilities are viable investments and can be used in achieving the vision 2030 which aims at increasing income from farming through innovative, commercially oriented and modern agriculture. The study recommends that a pilot cold storage facility be set up to so as to make the farmers fully understand the potential and benefits of potato cold storage technology. There is need for more consultation on the most optimum cost of storage facilities so as to influence the farmers in the region to use warehouse storage facilities.

CHAPTER ONE 
INTRODUCTION 
Background of the Study 
Potatoes are the world’s leading non grain staple food, and it ranks third among the most important food crops in terms of human consumption in the world after rice and wheat with more than a billion people consuming it worldwide (CIP, 2010). In the year 2010, worldwide potato production ranked fourth with an estimated 324,271,626 tonnes (FAOSTAT, 2012). 

Over the years, there has been an increase in potato production area; this increase has been greater than all other food crops in developing countries (CIP, 2010). This might have been attributed to the fact that: a hectare of potato can yield up to four times the food quantities of cereal crops, are up to seven times more efficient in using water in their growth than cereals, and; they mature within 3 to 4 months, which is less than the number of months most cereals take (CIP, 2010). Developing countries are ideal for potatoes production as they are characterised by low land availability and abundant labour supply (FAO, 2006). In the year 2007 Kenya was ranked 8th in Africa in terms of potato production with an estimated area of 120,000 hectares of land covered with potatoes and 800,000 tonnes produced from this area at an average yield of 6.7 tonnes per hectare with the neighbouring country Uganda following closely as the ninth (FAO, 2008). 

In Kenya, potatoes are the second most important food crop after maize (MoA, 2012). Potatoes are used as cash crops as well as a food crops (GoK, 2009). Potato production in Kenya is mainly done in the highland areas and most of the producers depend on rain fed agriculture (Gildemacher et al., 2009). In the highlands, potatoes are considered a much more constant source of income compared to maize because they mature in 3 to 4 months while maize can take up to 10 months due to the climatic conditions. Therefore, potatoes production is an important source of income for farmers in potato growing regions. 

According to Muthoni and Nyamongo (2009), main potato growing areas include parts of Molo, Meru, Kirinyaga, Embu, Laikipia, Nyandarua and Muranga counties, production in these regions is done twice a year during the two rainy seasons. This leads to excess supply after the rainy seasons and low during off seasons, which in turn lead to prices rising after the end of harvest, and later falling when the next harvest begins there is therefore a supply trend that depends on the season (Walingo et al., 2003). During months of glut supply, prices fall drastically and as a result, farmers’ income is greatly reduced and may sometimes lead to losses. Most of the Potatoes produced in Kenya are consumed locally (FAO, 2008). 

Potatoes unlike cereals are not exposed to border parity price volatility and other international market influences. This may be attributed to the fact that only a very small portion of the potatoes produced are traded internationally and hence their prices are determined by local demand and supply conditions, these makes it an ideal crop for food security in developing countries (FAO and CFC, 2010). An increase in potato production has the potential to reduce dependency on cereal foods, which will in turn reduce exposures to price volatility as well as reduce dependency on importation of cereal food commodities by developing countries (FAO and CFC, 2010). Therefore, ways of ensuring food security need to be sought and utilised. As in 2011, Neves identified investment funds operating in futures markets and other agribusiness markets as well as the increased use of food crops in the production of bio fuels as some of the reasons for the increased food prices and the expected further increase. 

Although perishable, potatoes can be stored easily thus making them readily available to consumers by ensuring a regular supply all year round (Fuglie, 1999). Depending on the method of storage adopted, potatoes can be stored for 2 to 9 months (Lerner and Dana, 2000). In Kenya, potato storage is not common as most of the produce is sold at harvest (Kaguongo et al., 2008). Farmers sell 80% of their produce at harvest while the rest is stored and used as seed in the next planting season (Gildemacher et al., 2009). Lack of proper potato storage facilities in Kenya has been attributed to be a major problem and an influencing factor to other constraints. Farmers in Meru, Laikipia and Nyandarua Sub-Counties are aware of the importance of potato storage and are already storing potatoes Walingo et al. (2003), they were in fact willing to improve storage if there was a guaranteed market for the stored potatoes, at the same time very few farmers in Nakuru practise potato storage as most of the production is done on hired land. 

There are different ways of storing potatoes and the choice of structure and design to be adopted ought to depend on the quantity of potatoes to be stored, length of storage period, characteristics of varieties to be stored, the climatic conditions during the storage period and the use of the potatoes after storage (Booth and Shaw, 1981). Traditional methods of storing potatoes include leaving in the field by delaying harvest, clamping and covering with hay or soil. Potatoes stored using traditional methods cannot be store for long periods, this is due to the fact that potatoes are living organisms and consequently respire. To be able to store potatoes for longer periods of time, longer than 1 month, stores specifically made for potato storage must be used. These stores must be able maintain tubers at a desired temperature, maintain a high relative humidity to promote wound healing at harvest and to prevent tuber shrinkage, provide oxygen for respiration and remove carbon dioxide and other harmful gasses as well deal with adverse storage conditions (Small and Pahl, 2003). Ventilation within the structures can be done using the refrigeration system or the ambient air system (Pringle et al., 2009). Cold storage facilities are helpful in that they prevent the decay of perishable products therefore increasing availability during off-seasons, these aids in preventing farmers from selling their produce at throw away prices and preventing shortages (Eltawil et al., 2006). 

There are community based storage facilities under construction in the Mt Elgon region (Kasina and Nderitu, 2010). In Meru and Nyandarua counties there are four farmer groups that are willing to engage in setting up collection centres that have storage facilities so as to gain the benefits linked to them (Giencke, 2011). These groups have drawn up proposals or are in the process of writing them with an aim to get funds for the construction from Smallholder Horticulture Marketing Programme, (SHoMaP). The construction of these collection centres has been estimated to cost approximately KES 25 million. The collection centres will be a way for these groups to market their produce collectively as well as increase their bargaining power. SHoMaP is working with Promotion of Private Sector Development in Agriculture Programme (PSDA), with an effort to gain ideas from farmers as well as make them understand the concept of potato collection centres and potato storage. 

The lack of storage facilities often lead to increased impact of other constraints farmers are exposed to. An example of these constraints is poor roads which lead to increased transportation costs as well as probability of post-harvest losses, in some areas the roads are not passable and this often leads to loss of the entire harvest. When harvesting takes place during drier months traders collect the produce straight from the farms, but if the converse occurs farmers have to hire carts or tractors at their cost to transport the produce to the nearest market centre (Diop, 1998). 

The potato marketing chain has been characterised as being ineffective and affected by problems of marketing and production (GoK, 2009). There is therefore need for innovations aimed at improvement in the chain. Most potato farmers sell their produce on farm to traders and brokers, prices obtained are most of the time non-negotiable this is due to the high sellers to buyers’ ratio (Muthoni and Nyamongo, 2009). Farmers lack sufficient market information which often leads to uneven bargain power thus leading to exploitation by traders who in some instances set the prices rather than allow the demand and supply forces to play their role (Walingo et al., 2003). In 2005, the government of Kenya developed laws with the objectives of stream lining the chain and ensuring that farmers profit from potato production after identifying the ineffectiveness of the potato marketing chain (Kasina and Nderitu, 2010). However, these laws are not being adhered to and the lack of storage facilities was mentioned as one of the reasons why. 

Farmers are also not able to obtain credit due to lack of collateral and incomes that are not constant. The lack of sufficient income has often lead to farmers selling immature tubers due to urgent cash needs which leads to poor quality tubers reaching the market which in turn fetch low prices. Insufficient income leads to poor crop husbandry and input use which lowers the quality and quantity of produce (Kabira, 2002). Most potato farmers in Kenya do not add any value to their produce and therefore have remained uncompetitive. It has been estimated that potatoes are worth less than half at farm gate compared to at consumption level (GoK, 2009). 

Proper storage and collection centres have been identified as innovative tools that have the potential to improve farmers’ income by protecting them from selling their produce at throw away prices before they decay (Eltawil et al., 2006). The introduction of proper storage facilities would help smooth out supply of potatoes to the market and in turn reduce or eliminate peaks during months of bumper harvests and depths during months of low supply and help reduce overall price oscillations (Fuglie, 1999). According to (Booth and Shaw, 1981) unwavering supply and prices lead to increased overall potato consumption. Increased consumption leads to increased potato demand. Collection centres would in addition be a source of information for farmers, and farmers would be able to market their produce through the centres there by increasing their bargaining power. Value addition can be done in these collection centres thereby integrating farmers vertically, increasing their income, and bargaining power. Food security and a steady source of income for potato farmers will eventually be achieved by reducing overdependence on maize, which is subject to international market influences, and its price is very volatile. The government of Kenya acknowledges the potential potatoes have as far as creating employment, income generation 
and attaining the Millennium Development Goal No.1 of reducing extreme poverty and hunger by more than half by the year 2015 (MoA, 2009).

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Item Type: Kenyan Postgraduate Material  |  Attribute: 49 pages  |  Chapters: 1-5
Format: MS Word  |  Price: KSh900  |  Delivery: Within 30Mins.
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