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On the costs of being small: Case evidence from Kenyan family farms

Year of publication 2017

Place of publication Rome, Italy ;

Pages 60 p.

Author Karfakis, P., Ponzini, G., Rapsomanikis, G.

Publisher FAO ;

Product type Book (series)

Category Working paper

ISBN 978-92-5-109837-0

Series title FAO Agricultural Development Economics Working Paper

Series number No. 17-03

Edition 1

Synopsis (short abstract) We analyze allocative efficiency of major input factors for farmers in Kenya. Marginal value products are estimated for land, labor, inorganic fertilizer and seeds, at the farm household level and compared with marginal costs as approximated by their prevailing market prices. Price efficient and inefficient farmers are identified and equivalent value losses are computed as shares of household income, per hectare and for the society. A very high proportion of farmers are characterized as allocati vely inefficient and substantial equivalent value losses are estimated for all factors. In the case of labor, losses are sufficiently high that if labor is paid the market wage rate instead, income from agriculture would double. Among other factors, inefficiency levels are correlated with farm size; as farm size increases, losses as share of household income decline for labor but increase for land, fertilizer and seeds. Losses per hectare for all inputs decline with farm size. Finally the correl ates of inefficiency levels are explored systematically. Overall, lack of access to resources is the major reason that some inputs are underemployed. On the other hand, lack of alternative opportunities is a basic reason that factors are overused.

Language English

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