Maize supply response in Kenya: A farm-level analysis

Abstract

Maize is the main staple food crop in Kenya and the government policy objective is to increase maize production in order to achieve food self-sufficiency and security. The government has been applying import tariffs on maize, procuring maize at support prices, and imposing non-tariff barriers on maize imports as measures aimed at motivating farmers to produce more maize. Maize production has not, however, substantially improved in the last 13 years, and consumption demand has remained above domestic supply. This study aimed to assess maize supply response to price and non-price factors and how sensitive fertilizer and labour demand are to prices and non-price factors. The study used cross-sectional farm-level data pertaining to 2003/2004 cropping year for 1187 maize producing households in Kenya. Normalized restricted translog profit function was used to estimate maize supply and variable input demand elasticities. Results showed that own-price elasticity of maize supply is less than unity, implying that maize support price is an unattractive policy for expanding maize supply. Fertilizer use was found to be particularly important in the decisions on resource allocation in maize production. Of the fixed inputs, land area was found to be the most important factor contributing to the supply of maize. Market access and educational endowment of the household head seemed not to have much influence on maize supply. It is suggested that since high maize support price may not be feasible, making fertilizer prices affordable to small holder farmers by making public investment in rural infrastructure and efficient port facilities and promoting standards of commerce that provide the incentives for commercial agents to invest in fertilizer importation, wholesaling and retailing would be desirable. Encouraging more intensive use of other productivity enhancing inputs in addition to fertilizer is also suggested, since land consolidation to achieve economies of scale seems untenable in the light of the existing extensive fragmentation of land parcels into uneconomical units.