The Productivity Trap in Kenya's Highland Agriculture: A Bilevel Programming Analysis of Credit and Wage Constraints
Yabann, Wilson Kimutai
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Permalink
https://hdl.handle.net/2142/72175
Description
Title
The Productivity Trap in Kenya's Highland Agriculture: A Bilevel Programming Analysis of Credit and Wage Constraints
Author(s)
Yabann, Wilson Kimutai
Issue Date
1992
Doctoral Committee Chair(s)
Onal, Hayri
Department of Study
Agricultural Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Abstract
Much of the less developed world faces the problems of feeding an ever increasing population. Improved agricultural productivity is the key to improved food security and economic returns in these regions. Much of the necessary improvement in productivity is a function of improved factors of production, such as operating capital (credit) and labor allocation. It has been observed that access to credit by the small farms is limited by their ability to offer collateral. Generally, large farms are thought to make more profitable use of productive assets than small farms and hence the inclination for commercial banks and other financial institutions to restrict access to large farms only. This phenomenon can be seen as a major weakness in attempts to improve agricultural production in less developed world. Another weak point in this direction is that of government setting of farm minimum wages which tends to cause labor to be unproductively allocated.
This study attempts to look at how credit and farm minimum wage rate affect farm resources flow, which have been viewed as the main obstacle to improved productivity in Kenya's highland agriculture. Specifically, the study looks at the effects on overall production of legally-set minimum farm wages and restricted access to credit by small farmholders. It investigates the impacts of these constraints on land and labor resources flow between the smaller farming groups and the large farms in Njoro region. These farming groups make their farm operations decisions independently from each other and yet, there exists an interrelation between their decision making processes since the decisions of one category affect the decisions of the other, and vice versa. An appropriate methodology was used to handle the multilevel decision making process that exists in the region. A bilevel mathematical programming model was developed and used as the tool for economic policy analysis.
The results of this study show that more access to capital by smallholders should increase overall production and increase the intensity of land use. A reduction of the minimum farm wage improved labor resource flows, increased production, and increased land transfers in the area. Both the wage and credit reforms alter employment and production potential among the different farm production activities.
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