Mutuku Judith - Department of Agricultural Economics
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Transcript Mutuku Judith - Department of Agricultural Economics
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
C M A A E T H E S E S D I S S E M I N AT I O N W O R K S H O P
PRESENTATION OUTLINE
Introduction
Problem Statement
Objectives
Hypotheses
Justification
Methodology
Results and Discussion
Conclusion and Policy Implications
INTRODUCTION
WFP assists about 90 million people per year food in
over 70 countries
Purchase 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 agrodealers.
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 postharvest handling and marketing choices.
PURPOSE AND OBJECTIVES
Overall 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
margins
Hypotheses 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
METHODOLOGY
Economic theory; Random Utility Model theory(RUM)
First objective: Gross margin analysis
Grossmargin TR TVC ( PQ TVC )
Where TR= revenue,
TVC=variable cost,
P=price of maize
Q = quantity of maize produced.
…
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
Y * (Grossmargin) a bRi cXi ei
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
RESULTS AND DISCUSSION
Attribute
Uasin Gishu county
Mean- P4P
(N=57)
Age (years)
HHsize
–
persons
Years
of
schooling
Farm
size
(acres)
Price of 90 kgbag of maize
(KShs)
Maize
yield
(90kg-bag
/
acre)
Gross margin/
Farm income:
Kshs/ha/year)
Distance to the
P4P
store
(Kms)
Narok county
Mean-NonP4P (N=69)
45
(1.58)
6
(0.32)
10
(0.457)
6
(1.44)
2946
(31.18)
47
(1.76)
6
(0.425)
9
(0.41)
5
(0.73)
2620
(34.02)
21
(0.31)
19
(0.49)
38994
(708.09)
16
(1.44)
t-test
Mean- P4P
(N=57)
Mean-NonP4P (N=69)
t-test
44
(1.48)
8
(0.433)
7
38
(1.16)
7
(0.445)
9
14
(3.88)
3125
(37.20)
22
(3.88)
3086
(54.53)
**
20
(1.82)
15
(0.58)
**
31627
(990.22)
***
34877
(716.05)
27624
(676.53)
***
10
(1.05)
**
11
(2.11)
12
(1.40)
***
**
**
***
RESULTS AND DISCUSSION
First 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
t- statistics
difference
P4P farmers
36 954
7313.55
*8.886
Non P4P
29 640
farmers
DETERMINANTS OF PARTICIPATION
Maximum likelihood
Marginal effects
estimates
Variables
Coefficient
p-value Coefficient
p-value
Gender
0.005
0.179
0.023
**-0.990
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
Price
market
extension
*-0.016
***0.002
0.053
0.000
0.003
-0.000
0.066
0.000
0.021
0.133
-0.004
0.274
***1.887
0.000
-0.377
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
Propensity Score
Untreated
.6
.8
Treated
1
IMPACT OF P4P PARTICIPATION ON FARMERS INCOME
Matching Sample Treated Control Differen Std
T stat
ce
error
Unmatc
hed
36953
29674
NNM
ATT
ATU
ATE
36953
29674
29674
36291
KBM
RM
7279
847
8.58
7245 1213.94
6616
6903.23
5.97**
ATT
ATU
ATE
36953.94 29793.36 7160.57 1035.43
29674.53 36581.70 6907.16
7022.63
6.92**
ATT
ATU
ATE
36953.94 29240.48 6974.14 1308.56
29694.53 36134.98 7037.95
7008.87
7.13**
CONCLUSIONS
P4P 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