IMPACT OF PURCHASE FOR PROGRESS (P4P) PROJECT ON FARM INCOMES IN KENYA (CASE OF TRANSMARA AND ELDORET EAST DISTRICTS )

PRESENTED BY JUDITH .M .MUTUKU

SUPERVISORS: DR. NZUMA

DR. IRUNGU

CMAAE THESES DISSEMINATION WORKSHOP

PRESENTATION OUTLINE

Introduction

Problem Statement

Objectives

Hypotheses

Justification

Methodology

Results and Discussion

Conclusion and Policy Implications

INTRODUCTIONWFP assists about 90 million people per year food in

over 70 countriesPurchase for progress (P4P) is a programme

implemented by the WFP in 21 countries in parts of Africa, Central America and Asia.

P4P is a 5 year pilot project implemented in Kenya in 2009 with an aim of moving smallholder farmer groups from informal into structured trade.

In Kenya, targeted areas were Eastern, Rift valley and western provinces.

INTRO…. The P4P project in Kenya works closely with the

Ministry of Agriculture and partners such as CGA, AGMARK,AMPATH, KACE, farmers and agro-dealers.

The partners assist farmers in meeting WFP quality requirements and capacity building to participate in market.

PROBLEM STATEMENT The P4P project has been in operation for three years

since 2009 with reported achievements and challenges.

However, the impact of P4P project on farmer’s income is largely unknown in Kenya thus the need for reliable empirical evaluations that provide evidence on its impacts

It is also not known whether the P4P project has increased agricultural production, improved post-harvest handling and marketing choices.

PURPOSE AND OBJECTIVESOverall Objective: To quantify the impact of WFP’s P4P

project on farm incomes among the smallholder farmers in Uasin Gishu and Narok counties in Kenya.

Specific objectives: Assess the differences in maize gross margins between

P4P participants and non-participants.  Evaluate the impact of the P4P project on maize gross

marginsHypotheses Tested

There are no differences in the maize gross margins between P4P participants and non-participants

Participating in P4P has no effect on maize gross margins

METHODOLOGYEconomic theory; Random Utility Model theory(RUM)

First objective: Gross margin analysis

Where TR= revenue, TVC=variable cost, P=price of maize Q = quantity of maize produced.

)(arg TVCPQTVCTRinGrossm

… Second objective: PSM

First step; logit model;

Participation Eqn: = 1 and 0 otherwise) = βo+ β1 AGE + β2 EDUC + β3 GENDER + β4 CREDIT + β5 HHSIZE + β6 FARMSIZE + β7 MZPRICE + β8

EXTN + β9 DISTANCE + β10 FOMEMBER + β11 OCCUPATION + e (error term)

Second Step: PSM Matching Methods

Where a is a constant, b measures impact of P4P on mean output, c is the average treatment effect, Ri - dummy variable = 1 if farmer i participates in P4P project and 0 otherwise, Xi are propensity scores from the preceding logit model and ei is the error term

iii ecXbRainGrossmY )arg(*

RESULTS AND DISCUSSIONAttribute Uasin Gishu county Narok county

Mean- P4P (N=57)

Mean-Non-P4P (N=69)

t-test Mean- P4P (N=57)

Mean-Non-P4P (N=69)

t-test

Age (years) 45(1.58)

47(1.76)

  44(1.48)

38(1.16)

**

HHsize –persons

6(0.32)

6(0.425)

  8(0.433)

7(0.445)

 

Years of schooling

10(0.457)

9(0.41)

  7 

9 

**

Farm size (acres)

6(1.44)

5(0.73)

  14(3.88)

22(3.88)

 

Price of 90 kg-bag of maize (KShs)

2946(31.18)

2620(34.02)

*** 3125(37.20)

3086 (54.53)

***

Maize yield (90kg-bag / acre)

21(0.31)

19(0.49)

** 20(1.82)

15(0.58)

**

Gross margin/Farm income: Kshs/ha/year)

38994(708.09)

31627(990.22)

*** 34877(716.05)

27624(676.53)

***

Distance to the P4P store (Kms)

16 (1.44)

10(1.05)

** 11(2.11)

12(1.40)

 

RESULTS AND DISCUSSIONFirst Objective- Gross margin analysis

The difference in mean between the P4P participants and non participants was statistically significant at 1 percent –reject null hypothesis.

Farm income (Ksh / acre/year)Mean Mean

differencet- statistics

P4P farmers 36 9547313.55 *8.886Non P4P

farmers29 640

DETERMINANTS OF PARTICIPATION

Maximum likelihood estimates

Marginal effects

Variables Coefficient p-value Coefficient p-value

Gender**-0.990

0.005 0.179 0.023

Age 0.005 0.736 -0.002 0.667

Education -0.007 0.866 0.003 0.728

Occupation 0.274 0.385 -0.582 0.404

Hldsize 0.068 0.224 -0.004 0.772

Farm size *-0.016 0.053 0.003 0.066

Price ***0.002 0.000 -0.000 0.000

market 0.021 0.133 -0.004 0.274

extension ***1.887 0.000 -0.377 0.000

credit ***0.812 0.000 -0.263 0.000

DISTRIBUTION OF PROPENSITY SCORES AND AREA OF COMMON SUPPORT

P-value of the logit model = 0.000 model fits the data well

0 .2 .4 .6 .8 1

Propensity Score

Untreated Treated

IMPACT OF P4P PARTICIPATION ON FARMERS INCOME

Matching Sample Treated Control Difference

Std error

T stat

Unmatched

36953 29674 7279 847 8.58

NNM ATTATUATE

3695329674

2967436291

72456616

6903.23

1213.94 5.97**

KBM ATTATUATE

36953.9429674.53

29793.3636581.70

7160.576907.167022.63

1035.43 6.92**

RM ATTATUATE

36953.9429694.53

29240.4836134.98

6974.147037.957008.87

1308.56 7.13**

CONCLUSIONSP4P project has;Increased participants incomes by 7245ksh/acre/year (NNM)

Increased participants productivity by 3-90 kg bags/acre

Created a ready market for maize

Improved participants access to credit especially through partnership with equity bank

Improved participants access to extension through its partners like MoA, CGA etc

Improved collective marketing through FOs

POLICY IMPLICATIONS Need to encourage farmers to participate in P4P project

for better prices and assured market The government and other institutions that lend credit

should design better policies for credit packages that are tailor-made for farmers-fair collateral

The government should enhance extension services through extension personnel to equip farmers with the appropriate knowledge to improve farm productivity.

Policies which encourage farmers to market collectively should be enacted as well as timely payments to avoid delayed payments

THANK YOU

GOD BLESS