EFFECTS OF NON-FARM EMPLOYMENT ON VALUE ADDITION DECISIONS AMONGSELECTED SMALLHOLDER FARMERS IN MAU-NAROK WARD, NJORO SUB-COUNTY, NAKURU COUNTY, KENYA

Abstract

Smallholder agriculture in Kenya faces challenges such as inadequate value addition and limited marketable outputs, hindering both domestic and foreign market demands. This study investigated the impact of non-farm income on value-addition decisions among rural households in Nakuru County, Kenya. The general objective of this study was to contribute to improved livelihoods through encouraging participation in non-farm employment and value addition among smallholder farmers. The specific objectives of this study were as follows: To determine the nature of value-addition activities pursued by households that earn income from non-farm sources, to determine the drivers for investment of non-farm income in value addition activities among smallholder farmers and lastly to determine the effect of non-farm income investment on value addition decisions among smallholder farmers in Mau-Narok ward, Njoro sub-county, Nakuru county. Utilizing a multi-stage sampling procedure, data was collected from 245 respondents in the Mau-Narok ward, Njoro sub-county through a cross-sectional descriptive survey. Analysis was conducted using SPSS and STATA, employing descriptive statistics, chi-square tests, the Multivariate Probit model, and Multinomial Endogenous Switching Regression (MESR). Results indicated that the average age of household heads was 43.69 years, with most participants being male (56.33%) and married (81.2%). The average farm size was 1.75 acres, and households spent approximately 6.83 hours daily on non-farm activities, earning an average monthly non-farm income of KES 23,566. Factors such as gender, age, time spent on non-farm activities, non-farm income, production level, credit access, farm size, household size, number of enterprises, and market access was found to significantly influence value-addition decisions. The MESR model revealed that participation in primary value chain activities significantly increased household income by 0.97 units. Consequently, the household total income increased for farmers adopting each value addition practice in isolation compared to those adoption a combination of the value addition activities. Overall, these results conclude that the highest income is obtained from participation in primary value activity which is also greater than the effect of each practice jointly, suggesting that benefits are not complementary. This study concluded that non-farm income plays a crucial role in enhancing value addition, thereby boosting household income and contributing to poverty reduction and food security. Therefore, this study recommends that policymakers support farmer groups to enhance training on value addition, market opportunities, and credit access, thereby enabling smallholder farmers to make informed value-addition decisions that elevate their livelihoods.