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Clark University Agricultural Intensification, Diversification, and Commercial Production among Smallholder Coffee Growers in Central Kenya Author(s): Bryan Dorsey Source: Economic Geography, Vol. 75, No. 2 (Apr., 1999), pp. 178-195 Published by: Clark University Stable URL: http://www.jstor.org/stable/144250 . Accessed: 09/05/2014 00:35 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Clark University is collaborating with JSTOR to digitize, preserve and extend access to Economic Geography. http://www.jstor.org This content downloaded from 169.229.32.137 on Fri, 9 May 2014 00:35:52 AM All use subject to JSTOR Terms and Conditions

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Page 1: Agricultural Intensification, Diversification, and Commercial Production among Smallholder Coffee Growers in Central Kenya

Clark University

Agricultural Intensification, Diversification, and Commercial Production among SmallholderCoffee Growers in Central KenyaAuthor(s): Bryan DorseySource: Economic Geography, Vol. 75, No. 2 (Apr., 1999), pp. 178-195Published by: Clark UniversityStable URL: http://www.jstor.org/stable/144250 .

Accessed: 09/05/2014 00:35

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

.

Clark University is collaborating with JSTOR to digitize, preserve and extend access to Economic Geography.

http://www.jstor.org

This content downloaded from 169.229.32.137 on Fri, 9 May 2014 00:35:52 AMAll use subject to JSTOR Terms and Conditions

Page 2: Agricultural Intensification, Diversification, and Commercial Production among Smallholder Coffee Growers in Central Kenya

Agricultural Intensification, Diversification, and Commercial Production among

Smallholder Coffee Growers in Central Kenya*

Bryan Dorsey Department of Geography, Weber State University, Ogden, UT 84408

Abstract: The research summarized in this article establishes direct links between the scale, process, and output of agricultural production by examining the dynam- ics of intensification, crop diversification, and commercialization. Small farm sur- vey results from Kirinyaga District, Kenya, show that diversified production pro- vides smallholders with the opportunity to select a particular crop or crops for commercial production (such as coffee, French beans, or tomatoes) in order to increase farm-generated income while meeting increasing demands for local farm produce and export crops. The study shows that income per hectare (acre) does not consistently increase with increasing farm size, regardless of the level of commer- cialization. Smallholders operating at the 1.2 to 1.6 hectare (3-4 acre) scale appear to engage in higher-risk, more diversified, commercial production strategies than those with less area under production. These findings expand upon induced inten- sification theory and support the thesis that increased agricultural productivity results from both subsistence- and commodity-based production, though the research focuses on the latter.

Key words: agriculture, commercial production, diversification, induced intensifi- cation, intensification, Kenya, smallholder coffee growing.

Some might argue that there is currently enough food to feed the world's popula- tion, as total food production in the "devel- oping world" rose nearly 120 percent between 1960 and 1990; yet per capita food production in Africa decreased by as much as 20 percent during the same period (Bongarrts 1994, 36). The decline in Africa's per capita food production contin- ues in the late 1990s. Small-scale farmers, or smallholders, in sub-Saharan Africa are experiencing the duress associated with increasing population pressures (for exam- ple, declining farm size), continued mar- ginalization in the global economy, and unfavorable market fluctuations for com-

*This research would not have been possible without support from the Janet Comey Foundation and advice from Gary Gaile, Department of Geography, University of Colorado. I am grateful for the valuable com- ments of Susan Hanson and two anonymous reviewers.

mercial agricultural products. Despite this negative trend, the research presented here provides evidence that the smallhold- ers of Kenya are practicing highly produc- tive agricultural strategies.'

Positive change in agricultural develop- ment has been identified in several sub- Saharan regions, from Nigeria (see studies by Mortimore 1972; Netting, Stone, and Stone 1989) to Kenya (see Tiffen, Mortimore, and Gichuki 1994). I focus here on the strategies by which smallholder farmers in Kenya diversify their farm pro- duction and commercially specialize in par- ticularly favorable crop production in order to increase farm-generated income per hectare. Although it may be well known that smallholder agricultural production is often characterized by a high degree of

1 Other encouraging contemporary social developments in Africa are discussed by Gaile and Ferguson (1996).

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farm product diversification (Netting 1993), the dynamics of diversification in relationship to scale, commercial produc- tion, and smallholder prosperity, or output, have not been closely considered. Netting's ground-breaking work in Nigeria provides a starting point, as he notes that "the main strategy for combining high production per unit area with risk reduction and sustain- ability in Kofyar agriculture is diversifica- tion" (1993, 32). However, Netting does not consider specific diversification strate- gies and their relationships to farm size and commercialization. Furthermore, analysis of this nature has not been clearly linked to current theories of agricultural change.

Agricultural diversification has been a subject of some research and debate that may contribute to our understanding of agricultural change, or even innovation. Though the concept of economic diversifi- cation is not entirely new, theories of agri- cultural diversification and induced inno- vation have yet to be fully developed. Numerous studies have focused on agricul- tural innovation and technological change induced by population increase (Boserup 1981) and, more specifically, land and labor availability (Binswanger and Ruttan 1978). These factors have been considered collectively by Goldman (1993) and also by Tiffen, Mortimore, and Gichuki (1994). These and other works show that the agri- cultural development process is extremely complex, a process that is influenced not only by population density and resource availability but also by behavioral factors and economic opportunities. As Goldman concludes, "opportunities are as significant as constraints, and the sources of innova- tion by farmers are multiple" (1993, 68).

Various themes and theories on agricul- tural change in East Africa have emerged, some of which refute one another with regard to food production and farmer well- being. This study addresses issues of agri- cultural change-in particular, the implica- tions of highly diversified farms, primarily involved in coffee production-within Central Kenya's Kirinyaga District. I attempt to expand upon conceptions of

induced innovation and intensification by analyzing the strategies of smallholders in this region. If the scale at which diversifi- cation, commercial production, and farm- generated income peak (among smallhold- ings) can be determined, it may be useful in understanding, and perhaps predicting, dynamics of intensification and innovation under the constraints of declining land availability. The conditions of intensifica- tion in areas of high population density, such as Kirinyaga District, are a critical dimension in agricultural development.

I tested six hypotheses regarding interre- lationships among four variables: net income per hectare, diversification, com- mercial specialization, and scale. The first hypothesis posits a significant relationship between diversification and scale of produc- tion-that is, number of hectares under cul- tivation per farm. Though it is widely recog- nized that smallholders diversify their production, the precise scale at which maxi- mum diversification occurs provides a refer- ence point for subsequent hypotheses and future studies. Second, I hypothesize a pos- itive relationship between diversification and commercial specialization, that is, a greater number of crops under production provides the smallholder with a broader portfolio from which to select crops for the market. Third, diversification should be positively correlated with net income per hectare, and fourth, scale and commercial specialization should be positively corre- lated. Fifth, commercial specialization is expected to have a significant effect on income per hectare. Finally, scale should be positively related to income per hectare.

Diversification is measured by the num- ber of food and cash crops currently under production on a farm. Intensification is increased farm output, or an increase in the amount of land under production and yields per hectare; I measure intensifica- tion by the number of hectares (acres) cur- rently under production as a percentage of total available farm area.2 Commercial spe-

2 Acreage is the common unit of area mea-

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cialization refers to the predominant or favored production of a particular farm product, usually a cash crop. The degree of commercial specialization refers to the per- centage of total value of production (based on net farm-generated income per hectare), which is taken up by the most highly productive or highly valued product sold on the market. The standardized value of production is measured in Kenya shillings (KSh) per hectare. Scale, or farm size, is defined for present purposes as the areal extent of land cultivated by one iden- tifiable economic interest-that is, the area under intensified cultivation rather than total area per smallholding. Net income is simply the total annual farm-generated income per household.

Ilbery (1991) provides a useful clarifica- tion between "farm diversification" and "farm income diversification," studied by Evans and Ngau (1991). Farm diversifica- tion refers to diversification of on-farm activities, primarily within the sphere of agriculture. An example of farm diversifica- tion would be the introduction of a com- modity, such as coffee, organic vegetables, or value-added products. Farm income diversification refers to diversification of both off-farm and on-farm income-earning activities (Ilbery 1991). I focus here on agricultural diversification on the farm.3

Competing Theories of Agricultural Intensification

About 80 percent of the agricultural growth in Africa has occurred through the expansion of land area under cultivation, rather than via increased productivity of

surement used in Kenya; hence, most of the data gathered for this research and other stud- ies from Kenya are expressed in acres. Hence I include both hectares and (acres) in this paper.

3 I do not disaggregate crop selection and farm-generated income data by gender, although male and female household member responsibilities differ significantly. See Thomas-Slater and Rocheleau (1995) for a dis- cussion of related gender issues in Kenya.

land already under production (Turner, Hyden, and Kates 1993). The latter form of growth is expected to increase as low- potential agricultural areas come under increasing population pressure. The two main explanations for growth in agricul- tural production focus on changing subsis- tence needs or market demand.

The human needs or subsistence needs based theory stems from the work of Chayanov (1966) and Boserup (1965, 1981), which posits that agricultural pro- ductivity is driven by the immediate bio- logical needs of a population to feed itself. According to Boserup's thesis, as popula- tion increases, farmers will respond by employing more labor, if available; agricul- tural productivity will increase as a result of innovation and improved agricultural tech- nology. Technological innovation, driven by increased need, may include improve- ments on traditional farming practices or more modern change, such as alteration of plant genetics to create high-yield varieties. Technological change may not occur in a steady progression; rather, it is linked to thresholds of demand (Turner, Hyden, and Kates 1993). Here, Boserup's theory is less developed, yet the assertion is made that intensification may lead to an increase in "exchange" or market production. While some researchers have expanded upon Boserup's theory (Goldman 1993; Tiffen, Mortimore, and Gichuki 1994; Turner and Ali 1996), others argue that intensification does not always result from rapid popula- tion growth or high densities such as those found in many areas of sub-Saharan Africa (Ho 1985; Lele and Stone 1989). Ho (1985) notes that the lack of technological development can result in environmental degradation, whereas Tiffen, Mortimore, and Gichuki (1994) document environ- mental conservation linked to population increase in an area of relatively low popula- tion density.

An opposing yet potentially complemen- tary theory is derived from an economic perspective, arguably similar to that pro- posed by Boserup in her later work. According to this view, known as market

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demand theory, farmers participating in commodity production respond to market demand in an effort to maximize profit. Maximization may be constrained by farm- ers' aversion to risk (Wolgin 1975; Anderson and Hazell 1989; Alam 1993). In addition to market demand, resource endowments, or the lack thereof, may induce technological advance in agricul- tural development. Thus, an agricultural economic "induced innovation" theory (Binswanger and Ruttan 1978; Hayami and Ruttan 1985) expands upon previous theo- ries that were based on population pres- sure as the main influence upon agricul- tural change.

Figure 1 shows the two main pathways to "improved well-being" via agricultural input and output intensification.4 Although smallholder production is divided between produce for consumption (subsistence path) and commodity farm products (mar- ket demand path), with differing motiva- tions behind each, the two strands are often combined in consumption-commod- ity or "induced-intensification" theory (Turner, Hyden, and Kates 1993; Turner and Ali 1996). Essentially, the theory posits that intensification is induced by the need to produce food for both consumption and the market. Turner and Ali argue that "the overwhelming majority of smallholders throughout the world are neither pure sub- sistence nor pure market farmers" (1996, 14985). Their study suggests that the com- posite of consumption and commodity dri- ven intensification is a strong rationale, but they did not consider the degree of diversi- fication, nor the extent of commercializa- tion aside from "market production." Some of the factors influencing induced intensi- fication include limited food reserves, climatic or environmental constraints, technological advantages/disadvantages, marketing opportunities/isolation, eco-

41 have modified Turner, Hyden, and Kates's (1993) diagram to emphasize agricultural diver- sification rather than economic diversification.

nomic policies, and civil unrest. In their Bangladesh case study, Turner and Ali sug- gest that although the environment and technology are leading causes of intensifi- cation, these two variables "fail to consider the basic behavioral rationale for the deci- sion to intensify" (1996, 14990).

Goldman (1993) provides additional insights from three different locations in Kenya, showing that technological change is influenced by both market opportunities and the availability of land and labor, among other factor scarcities (particular emphasis is placed on fertilizer and pesti- cide inputs), yet opportunities and such scarcities lead to different outcomes regarding technology adoption. Most rele- vant to the findings of my study conducted in Kirinyaga District were Goldman's observations from Kigumo Division. Both regions are characterized by high popula- tion densities and well-developed infra- structure, where the coffee economy exerts a strong influence on the distribution and use of fertilizers and pesticides. Goldman (1993, 56) makes several points pertinent to this study: "Sample farmers report that close to half of their purchased fertilizers are for maize and other food crops, with the remainder used on coffee trees. Smaller coffee farmers (those with fewer than 500 trees) often say that the available credit is insufficient for the amount of fer- tilizer they want." Access to credit is partic- ularly significant to diversification and commercial production, as farm product commercial specialization may depend on the purchase of inputs. If the scale at which inputs and credit availability become con- straints to diversification and commercial specialization can be specified, a more pre- cise conception of induced intensification may be obtained.

Findings by Tiffen, Mortimore, and Gichuki (1994) of environmental recovery associated with increasing population in the Machakos District in Kenya are also consistent with induced intensification the- ory. Typically, as population increases in higher-potential agricultural areas, the amount of land per person decreases (the

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Subsistence Needs Path Zonsumption Production)

Market Demand Path (Commodity Production)

Economic Growth

Figure 1. Pathways from intensification and diversification. Source: Adapted from Turner, Hyden, and Kates (1993, 11).

average farm becomes smaller), often lead- ing to a decline in household food suffi- ciency and farm incomes. Several possible outcomes are then cited: migration or cir- culation to urban areas or nonagricultural sectors, permanent migration to lower- potential agricultural areas, intensification requiring capital and/or extra family labor, and the linkages of agriculture to other sec- tors of the economy (Tiffen, Mortimore, and Gichuki 1994; Tiffen and Mortimore 1994). Tiffen, Mortimore, and Gichuki note that annual productivity data may not be very reliable or meaningful until it is compared to the previous 10, 20, or more years. (See Rocheleau (1995) for criticisms of the Machakos study and Mortimore and Tiffen's (1995) response to Rocheleau.) Lacking primary survey data gathered over a long time period, my study provides only a starting point for future observation to assess sustainability. I seek to elucidate the

dynamics of agricultural diversification and to consider relationships with income, commercialization, and scale.

Agricultural Diversification and Commercialization

Despite a lack of research explicitly focused on diversification, some works make reference to the strategy, as previ- ously noted. Ruthenberg and Jahnke (1985), for example, mention that subsis- tence production is "usually diversified" (1985, 123). In a study on agricultural pol- icy, the National Research Council (NRC) specifies that one of the attributes of "alter- native agriculture" is "diversification rather than continuous planting of fields to single or only a few annual crops" (NRC 1989, in Hatfield and Karlen 1994, 14). Never- theless, diversification is nothing new to the subsistence-oriented smallholder; it is

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widespread and is achieved via diverse methods. Agricultural producers diversify by growing a variety of crops at one time, by growing different crops in different locations at the same time, or by growing different crops over successive periods of time (Anderson and Dillon 1992; Alam 1993). Given the land tenure situation in Kenya's Central Province (individual landownership of rather small holdings) it is rare that a smallholder will have the option to grow in many separate locations. Rather, farmers are most likely to adopt the strategy of two or more planting-harvesting cycles per year, a practice commonly referred to as multicropping. In multicrop- ping, farmers pay close attention to the order in which crops are grown in accor- dance with frequency and duration of rain- fall. Ideally, leguminous crops, such as beans, are either mixed or multicropped with more nutrient-demanding crops such as maize (a system practiced throughout the world). A major advantage of multi- cropping is an increase in yields (empha- sized by Liebman 1987).

In addition to multicropping, smallhold- ers will often plant several crops at the same time. Planting two or more crop types together in one plot, referred to as inter- cropping, is a "striking feature of tradi- tional farming systems" marked by a high degree of crop diversity (Altieri 1987, 73). In addition to risk reduction, intercropping can reduce the spread of plant disease and pest infestation, stabilize production and increase income, and improve efficiency of labor and use of other resources under conditions of intensification and low tech- nology (Harwood 1979; Altieri 1983, 1987). Intercropping, or polyculture, has been shown to be advantageous for these and other reasons that are absent in "modern" or conventional monoculture or monocrop- ping systems (Altieri 1983). Though differ- ent strategies, multicropping and inter- cropping increase diversification of agricultural production among smallhold- ers in the study area. Although the strate- gies of intercropping and multicropping that encourage diversification are not new,

their renewed importance and widespread application may be viewed as innovative, leading to a need to redefine induced inno- vation in the sub-Saharan African context.

Wolgin (1975) and, most comprehen- sively, Netting (1993) have noted the prevalence of diversified multicropping systems in various sub-Saharan locations. In Kenya, Ruthenberg and Jahnke (1985) mention diversification as being prevalent in subsistence production, noting that the type of foods grown are those of preferred taste even though they may be lower-yield varieties. This raises an important distinc- tion between smallholders that produce at the subsistence level and those that grow for both subsistence and cash. Smallholders who pursue commercial pro- duction may diversify, thereby spreading the state's sources of income. Hence, diversification is often regarded as "an important means of avoiding over-reliance on a limited number of agricultural com- modities" (Wainwright 1994, 41). Clearly, the dynamics of diversification depend largely upon the setting in which different strategies and incentives arise, the most influential facet of which is the scale of pro- duction, or farm size. While several studies have focused on economic diversification as a risk aversion strategy (Fleisher 1990; Anderson and Dillon 1992; Alam 1993), and some have touched upon diversifica- tion as forms of multicropping and inter- cropping, few have looked specifically at diversified agricultural production in rela- tionship to scales of smallholder produc- tion.5

Whether it be coffee or French beans for commercialization, horticultural ex- ports give an indication of diversification at the national level. Exports from Kenya increased from 20,205 metric tons in 1982 to 38,155 metric tons in 1992, with almost 44 percent of the exported fresh produce

5 One study of scale and diversification in Japan is reported by the Organization for Economic Cooperation and Development (OECD 1995).

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in 1992 going to Great Britain, while Germany, France, and Holland imported about 12-13 percent each (Wainwright 1994). Although Wainwright's work in Kenya did not address diversification as it is defined in this study, he makes an impor- tant point: "Crop diversification spreads the national sources of income and is seen as an important means of avoiding over reliance on a limited number of agricul- tural commodities" (1994, 41).

The most successful horticultural crops exported from Kenya over the past five to ten years have been cut flowers, French beans, and avocados, all offering potential for increased diversification. The produc- tion of cut flowers has been, so far, limited to a few large-scale farms requiring high investment capital (for greenhouses, pack- ing, and shipping), largely unavailable to smallholders. Most of these large flower- growing farms are found near Nairobi. Although further comparisons between the study area and other areas in Kenya would be interesting, none lends significant insight to the discussion since no data on diversification are available. However, any- one familiar with large-scale plantations in East Africa and other world regions is aware of the typical pattern of monocul- tured commercial production. In Kenya, coffee, tea, sugar cane, and, of declining importance, pyrethrum plantations lack the diversified production found on farms of less than about 4 hectares (10 acres) (the largest farm in the study area).

Research Methodology One objective of this research was to

probe the relationships between diversifi- cation and areal scale of production. Analysis of variations in farm-generated income per hectare was also pivotal to identifying the more beneficial means of increasing agricultural production, particu- larly the roles of diversification and com- mercial specialization. Early in 1995 I con- ducted a survey with a random sample of 67 farmers in an area of high agricultural potential in the Kirinyaga District of

Kenya's Central Province (Fig. 2). In keep- ing with rapid rural appraisal methodology (Casley and Kumar 1988, 1989), I used a formal survey questionnaire in conjunction with shorter informal interviews. The research hypotheses were tested using Two Stage Least Squares (2SLS) regression analysis. The advantage of 2SLS over Ordinary Least Squares (OLS) lies in the ability to control for endogeneity by esti- mating the interrelationships simultane- ously.

The following two equations were esti- mated simultaneously.

NI = ao + alD + a2CS + (a3S + E1 (1)

D = ,o + PINI + 32CS + 3,S + E2, (2)

where NI = net income (net farm-gener- ated income per year in Kenya shillings (KSh)); D = diversification (number of crops under production); CS = commercial specialization (percentage of leading com- mercial crop under production); and S = scale (number of hectares under produc- tion). The a's and P's measure the marginal effects of the respective right-hand side variables on the left-hand side variables. Independent error terms, el and E2 are dis- tributed standard normal. Equation (1) defines net income as a linear combination of diversification, commercial specializa- tion, and scale. Equation (2) explains diver- sification as a linear combination of net income, commercial specialization, and scale.6

Two important notes should be made regarding the structural equations stated above. First, estimates of each of the a's and P's from the equations are not fully identified using this analysis. Thus, reduced-form 2SLS estimates are reported where feasible. Second, I assume that com-

6 Further regression analyses were run using dummy variables to test for the influence of variations in scale and coffee yields; none of these redefined variables had a significant influence on the results.

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Figure 2. Location of surveyed farms: Kirinyaga District, Kenya.

mercial specialization and scale are exoge- nous variables. As previously discussed, smallholders have little or no control over

diminishing farm size. Commercialization is considered exogenous since, to some extent, the market determines the demand for coffee and other leading commercial crops. However, commercialization is less straightforward an issue than scale in light of the strong influence of quotas fixed by the International Coffee Organization (ICO). The ICO's quota system artificially restricts supply in an attempt to elevate

prices, but results are often only marginally

successful, as carryover stocks pile up (Shaw 1995).

2SLS takes the two dependent variables, net income and diversification, and creates fitted values for each, thereby reducing their collinearity with the remaining right- hand side variables. However, this does not

preclude the possibility of collinearity between the exogenous variables, commer- cial specialization, and scale. Despite a cor- relation coefficient between these two vari- ables of r = 0.63, and given the theoretical

imperative of simultaneously controlling for the effects of commercial specialization

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and scale, 2SLS produces efficient reduced-form estimates of some of the a's and P's. In the case of the relationships between diversification and net income and commercial specialization and scale, OLS results are displayed in Figures 4, 5, and 6 for respective simple regression. Note that net income and diversification are the two endogenous right-hand side variables in the system, and commercial specialization and scale are the only exoge- nous variables.

Survey Results

Agricultural Intensification in the

Survey Area

Conditions of agricultural intensification are clearly visible in the landscape of Kenya's Central Highlands. A visit to Kirinyaga District would leave little doubt in the mind of the casual observer that the region's high agricultural potential is being exploited through intensified small-scale farming, but the efficiency of exploitation, both in terms of economic profitability and environmental impact, is less obvious. A Small Farm Survey conducted in 1981 in the same area showed that roughly one- third of the farm land was used for annual crops, one-third for perennial crops, and one-third for pasture (Jaetzold and Schmidt 1982). Table 1 shows a significant change in area under production during the past 10 to 15 years, particularly in the percentage of land under pasture. Coupled with the effects of the current "zero graz-

ing" program, only a minute percentage of farm land is now set aside for pasture. Along with continued subdivision of farm holdings for an increasing number of household members, the decrease in graz- ing land suggests a trend toward intensifi- cation.

Over the past 15 years, population per square kilometer in Kirinyaga District has increased from an estimated 200 to 275 people, while average farm size has decreased by approximately 0.8 hectares (2 acres). Questionnaire responses from the survey show that 63 percent of the respon- dents view the shortage of available land as a "considerable" constraint to increased production. Of course, those smallholders with larger plots, of 1.6 or more hectares (4 or more acres), accounting for approxi- mately 25 percent of total respondents, did not view land availability as considerable a constraint. Rather, capital availability was viewed by 78 percent of the respondents as a leading constraint to increased productiv- ity, regardless of the area owned by the smallholder.

The average percentage of available land under production or cultivation per indi- vidual farm in the survey area is 90 percent. This figure contrasts with slightly lower estimates from earlier surveys, further indi- cating an increase in intensification. In the Kutus area, just south of Kerugoya (Fig. 2), but overlapping in terms of survey cover- age between my research and the Kutus study area (Kenya Ministry of Planning and National Development 1988), an estimated 68 percent of the land per farm was under

able 1

Farm Size and Coffee Production in the Study Area, 1981, 1987, and 1995 1981 1987 1995

Average farm size in hectares (acres) 2 (5) 1.9 (4.7) 1.2 (3) Percentage of land under cultivation 66 68 90

Average hectares (acres) under coffee production 0.24 (0.6) 0.45 (1.1) 0.5 (1.2) Average coffee yields in kilograms/hectare 799 800 800

Average hectares (acres) under pasture 0.7 (1.7) n.a. 0.16 (0.4)

Sources: For 1981, Jaetzold and Schmidt (1982, 699, 702, 704); for 1987, Kenya Ministry of Planning and National

Development (1988, 24, 33); for 1995, estimates are from the survey for this study.

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cultivation, as compared to the usual aver- age of 46 percent per farm in other parts of Kenya (Evans and Ngau 1991). Note also in Table 1 that the average farm holding size in the study area is consistent with the Kenya Ministry of Agriculture (1995) esti- mate of 1.28 hectares (3.18 acres) for the same year. Increases in population in the study area since 1989 have been paralleled by decreasing farm size. With the increase in population, competition for and frag- mentation of land has increased. Smallholder interviews and questionnaire responses from this research clearly indi- cate further subdivision of holdings among family members. Additional evidence of intensification is provided by comparing the survey data from this research to previ- ous studies. It is clear that smallholders are facing the problem of diminishing holding size as population densities have increased dramatically over time.

Survey findings show that the average farm size in the study area was about 1.2 hectares (3 acres), leaving 1.09 hectares (2.7 acres) under highly intensified produc- tion. Figure 3 shows the layout of a typical smallholder farm in the study area. Note that, on average, 0.48 hectares (1.2 acres) are under permanent coffee production, approximately 0.4 hectares (1 acre) or more is used to grow food crops (primarily maize and beans but some cash crops may be intercropped), and the remaining 0.2 hectares (0.5 acres) may be used to grow other cash crops, such as French beans or tomatoes. This leaves, on average, 0.12 hectares (0.3 acres) taken up by household dwellings, vegetable gardening, and live- stock raising (usually a half-dozen chickens and laying hens and one or two milking cows). Although dairy products, particu- larly milk, increasingly contribute to farm household income and consumption in the area, their monetary value was not sepa- rated from net farm-generated income. This is not to say that livestock raising is not a part of diversification strategies, but the study focused on cash crops, that is, com- mercial specialization (a more substantial portion of individual household income). It

maize and beans

average of 0.2 hectares (0.5 acres)

coffee

average of vegetable garden

0.5 hectares L^.".^ -^ I other food (1.2 acres) livestock crops

dwelling

other commercially specialized crops,

;f t e.g., French beans fruit trees

. : .! .. ' .. -iii

~: i :: -:*access.(uninproved ro d or pathway) t ;:::

Figure 3. Schematic of a typical smallholder farm in the study area.

is important to recognize that all farm hold- ings in the study area, viewed as a whole, are highly intensified relative to one another. Nevertheless, it is evident that smallholders with farms of less than 1.2 hectares (3 acres) cannot afford to leave much, if any, of their land under fallow.

Because the method of measuring inten- sification used in this study differed from conventional methods of measurement (for example, frequency of cultivation or num- ber of harvests per plot over a specified time period (Turner, Hyden, and Kates 1993)) findings vary from what is typically thought of as intensification. If farm pro- duce-generated income per hectare, as a reflection of yields per hectare, can also be thought of as a measure of intensification, then findings from this research give a somewhat different picture of intensifica- tion. If this approach is taken, instead of diversification being an inverse function of intensification, as is the case using the mea- sure of percentage of available area under production, diversification may be viewed as a positive function of intensification. It should be noted that the relationship between intensification and diversification depends largely upon the means by which the two variables are measured. Inter- preting the relationships between variables is also strongly influenced by the methods used in data gathering and analysis.

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Statistical Analyses

OLS results, shown in Figures 4, 5, and 6, give a cursory indication of the positive correlations between diversification, scale, net income, and commercial specializa- tion.7 A more thorough 2SLS regression analysis, summarized in Table 2, allows for control of endogeneity among these vari- ables. Several findings result from inter- preting the reduced-form estimates, which represent the unbiased effects of commer- cial specialization and scale on both net income and diversification. In reference to previously stated hypotheses, the first two relationships under consideration are those of diversification and scale, as well as diver- sification and commercial specialization.

Reduced-form estimates suggest that the effect of scale on diversification is pos- itive. Similarly, commercial specialization was found to have a positive effect on diversification. Almost all smallholders in the study area specialize in coffee produc- tion, but those who were most diversified were more economically successful and relied less upon subsistence-oriented food crop production. More detailed analysis of survey findings revealed that a highly diversified farm in the study area is one that has 10 to 13 different crops under pro- duction, whereas moderate diversification may be classified as 7 to 9 different crops under production and low diversification as 4 to 6 different crops. On average, there are 8 crops, or types of produce, under pro- duction per farm. A list of various crop types observed under production in the study area is provided in Table 3. The fre-

14 -

12

10 -

8-

Divers- 6 ification

4

2

0

0@ *0

000

0@

00 * 0 0 0000

0 000 0000 90

0

0 2 4 6 8 Scale

Figure 4. Diversification versus scale. 140-

120-

100-

Income 80-

(KSh/ 60- hectare)

40-

20-

0 0

li

* 09 I

* 0

I..0

I 0

0 2 4 6 8 10 12 14

Diversification

Figure 5. Income versus diversification.

Income

(KSh/ hectare)

140-

120-

100-

80-

60-

40-

20-

0

0 4

0 0 0900 0 %*

4b

~~0

-0 0 .

*

*04 *0???

0 20 40 60 80 100

Commercialization

Figure 6. Income versus commercialization.

7 Note that scatter charts, or scattergrams, in Figures 4, 5, and 6 are limited in that they do not show the total 67 cases for each variable, rather, one point on the chart may represent several cases (farms). Note also the wide dis- persions to each correlation, suggesting that even a fairly diversified farm may experience a wide variation in income per area. Furthermore, commercial specialization and scale exert an effect on income, as noted in the 2SLS results.

quency of production refers to the percent- age of farms from the survey sample that have the specified crop or produce under production. It was found that diversifica- tion drops slightly on smallholdings greater than 1.6 hectares (4 acres); yet only 5 of the 67 cases had more than that under produc- tion, leaving the evidence of a pattern among larger holdings inconclusive. Nevertheless, the most highly diversified

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Table 2

Results from the 2SLS Analysis NI D CS S

NI - 0.77a 1.06*b -2.19b D 0.06*b 0.45 b

CS - 0.63a

S - - -

Note: NI = net income, D = diversification, CS = commercial specialization, S = scale. aCorrelation coefficient. bReduced form estimate.

'Significant at .10 level.

and commercialized farms at the 1.2 to 1.6 hectare (3-4 acre) size provide some inter- esting insights.

In testing the third hypothesis regarding net income and diversification, the 2SLS method did not allow for reduced-form estimates of the relationship between these two variables. Nevertheless, the two vari- ables are highly correlated (r = .77). Similarly, commercial specialization and scale (fourth hypothesis) are also positively correlated (r = .63). Average annual crop or produce sales per farm is estimated at 22,900 KSh per year, which, after deduc- tions of input expenditures, gives an aver- age net income per farm of 14,800 KSh (an average of 5,010 KSh per acre). These fig- ures are consistent with other income esti- mates generated from past surveys (Kenya Ministry of Planning and National Development 1988; Evans and Ngau 1991). These results suggest that small- holders experiencing the effects of popula- tion pressures, such as decreasing holding size or fewer acres under production, may still have relatively high net income if they diversify and commercially specialize. This raises the persistent question: why do some smallholders commercialize and diversify while others do not, given that farm size is not as strong an influence as one might think. After discussing 2SLS results for subsequent hypotheses, I address the above question further by examining sev- eral farms in detail.

Results for the fifth hypothesis show that commercial specialization has a positive

Table 3

Crop Types Grown in the Study Area

Crop Production frequency" (%)

Maize 100 Beans 100 Coffee 97

English potatoes 75 Sweet potatoes 65 Tomatoes 57 French beans 20 Cassava 14

Sorghum 12

Finger millet 12 Other cropsb 74

aFrequencies are based on a population of 67 house- holds. bIncludes avocados, bananas, mangoes, papayas, and others.

effect on net income. In itself this relation- ship is not entirely surprising, since com- mercial export crops such as high-quality Arabica coffee often obtain higher returns than food crops such as maize that are con- sumed by the household or traded in exchange for labor. The positive relation- ship is most evident when a cash crop such as French beans is under production, as demonstrated in the example below. Second to coffee, French beans are the most profitable commercial production, followed by tomatoes (the three farms with the highest crop-generated incomes spe- cialized in all three of these items). It is likely that this sort of commercialization of horticultural products will increase, since the Kenyan government has pledged its support for expansion of this economic sec- tor (Kenya Ministry of Planning and National Development 1994). Market con- ditions exert a strong influence on profit, as in the Kenyan case of suppressed earnings from maize.

The issue of profitability is complicated by the fact that scale is not significant in explaining net income per hectare (sixth hypothesis). Theoretically, the insignifi- cance of scale implies that as farms get larger (within the 0.5 to 3 hectare (approx- imately 1-7 acre) range), their costs increase while their revenues, though

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increased, do not increase by enough to make them more profitable than a smaller farm. The insignificant relationship between scale and income is not unique to

Kirinyaga District, yet these findings are

representative of relatively small-scale farms from a small sampling, and further research is necessary in other regions for comparison. Other studies have found the same inverse relationship between farm size and farm productivity. Berry and Cline (1979) note that communal landownership and shifting cultivation

practices complicate the general question of size-productivity associations and cause difficulties in gathering empirical evi- dence. Their data from the Trans-Nzoia District in Western Kenya indicate that the smaller the holding, the greater the

gross output and profit per usable acre. Livingstone (1986, 164) reports similar

findings from Trans-Nzoia District in

Kenya, yet focuses primarily on labor dynamics in Kenya and notes that "the high degree of divisibility [of holdings], implying an absence of economies of scale, is what has permitted increasing amounts of labor to be absorbed." Other studies by Huntings (1977) and Dorling (1979) sup- port the argument that labor-intensive cul- tivation of very "small" holdings con- tributes to extremely high farm operating surplus and gross output per unit area.

Dorling's results clearly indicate higher farm operating surplus per hectare (KSh/hectare) as holding size decreases. Similarly, Huntings's findings show that gross output from holdings of 0.5 to 1 hectare (1.2-2.47 acres) produced almost six times that of holdings of 5 to 8 hectares. More recent studies from Kenya provide further evidence that large-scale agricul- tural units are not necessarily more effi- cient than small units (Bradshaw 1990). In fact, evidence for the inverse relationship between scale and income has been well documented in other world regions (Dyer 1991).

Discussion of Individual Farms and Implications of Results

A close look at several of the more pro- ductive farms involved in commercial pro- duction provides insight as to why some smallholders have higher net income than others, regardless of the size of their hold- ings. Some farmers may be described as being risk averse, while others engage in more risk-taking behavior.8 Those small- holders who specialize in French bean pro- duction within the study area, and are highly diversified, offer a strong example of the risk-taking approach. In an area just south of Kerugoya town (Fig. 2), David Njenga has a small plot of land that he has been cultivating for the past 20 years. On his 1.2 hectares (3 acres), he grows signifi- cant amounts of 11 different crops and pro- duce, including maize and beans (as do most farmers in the region), coffee, French beans, tomatoes, sweet potatoes, English potatoes, kale, bananas, avocados, papayas, and less significant amounts of other veg- etables, such as onions, carrots, and pep- pers. Njenga's production is close to that of the average for the area. Close by, Francis Machiria has 2.02 hectares (5 acres), but is only moderately diversified, with 9 differ- ent crops/produce under production, including coffee, but no specialized horti- cultural crops. As part of David Njenga's more diversified production strategy, he and his family have taken the risk of spe- cializing in French bean and tomato pro- duction, in addition to growing smaller quantities of subsistence-oriented food crops and some coffee for supplementary income. Interestingly enough, the Njenga farm has greater income per hectare than the Machiria farm.

These smallholders share the same risks of unreliable payments on their coffee

8 For more detailed discussions of inherent risks in agriculture see Love and Robinson (1984); Anderson and Hazell (1989); Fleisher (1990); Anderson and Dillon (1992); and Alam (1993).

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deliveries, high agricultural input prices, limited accessibility to financial assistance to defray production costs, and, in the case of French beans, marketing tightly con- trolled by exporters in Nairobi. Yet through diversification, one has specialized in a form of production that has increased net income, regardless of scale. In much of Kirinyaga District, including the study area, a perennial crop such as coffee (Coffea arabica) is almost always available for commercial production (all but two smallholders in the study area had some coffee under production). Labor and other inputs are often concentrated on coffee and other commercial crops, yet experi- ence has shown that smallholders do not put all of their eggs into one basket, so to speak. Fluctuations in the market value of coffee and ICO quotas and, more signifi- cantly, the unreliable timing of payment from coffee cooperatives or societies have forced smallholder coffee growers to grow other crops, especially food crops, as a way to reduce risk. Increased productivity is also a response to increasing domestic demand. Interestingly enough, commercial production is viewed as a high-risk strategy precisely because market prices are subject to extreme fluctuation. Because smallhold- ers have very little, if any, control over pol- icy or payments from coffee cooperatives and societies, they remain exceptionally vulnerable.

In addition to diversifying their crops, smallholders may attempt to reduce risk through the practice of staggered crop sea- sons. Agriculture specialists tend to cite crop rotations as an important strategy to maintain soil fertility, but they often over- look other strategies that require higher labor inputs, such as intercropping, or companion planting (for example, inter- mixing maize and beans) (Altieri 1987; Anderson and Dillon 1992). Because industrialized agriculture is structured for monocrop production, it is rare to find diversification on large-scale farms such as that observed in the African smallholder context.9 However, when Kenyan small- holders diversify their cash crops, they usu-

ally monocrop the produce for sale, such as, tomatoes, French beans, and other cash crops. The Kenyan government discour- ages intercropping with coffee altogether.

Labor issues are key to moving toward less subsistence-oriented production. Smallholders with a shortage of household labor and lack of capital to hire labor had a higher degree of subsistence (that is, they grew fewer commercial crops). Small- holders have significantly less capital avail- able to them than large farm owners and are usually at a disadvantage in terms of obtaining farm credit. Aside from the diffi- culties of accurately measuring variations in subsistence levels and labor inputs, the findings discussed thus far have several theoretical applications worthy of note.

The relationship between diversification and commercial production is central to understanding market-based intensifica- tion (right side of the induced intensifica- tion diagram from Fig. 1). As previously noted, a clear conception of this relation- ship may expose the impact of decreasing land availability on induced intensification. The relationship between these two vari- ables is particularly important when increased farm output is a direct result. Increased production is viewed as a posi- tive function of induced intensification, particularly when produce is made avail- able for local markets and consumption to meet rising demand and, at the same time, cash crop production stimulates the national economy. The relationship

9 Njoroge and Kimemia's (1993) recent work with the Kenyan Coffee Research Foundation (CRF) provides evidence of the benefits of mixed cropping of maize and other crops with coffee. One of the basic tenets of low-external- input strategies is to grow certain crops together that benefit one another, either by nutrient complementarity, root structure, foliage, pest deterrence, or purely for purposes of maintaining biodiversity. Researchers at CRF are beginning to adopt some of the low- external-input strategies that organizations such as the Kenya Institute for Organic Farming (KIOF) have endorsed.

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between scale and income points to a clar- ification needed in Figure 1, where "land expansion" is shown to lead to "increased agricultural production." First, if agricul- tural production is defined in terms of income per unit area, a simple increase in scale (hectares/acres under production) will not necessarily lead to increased pro- ductivity per hectare. Second, by specify- ing net income per unit area as a measure of increased production, the strong effect of commercialization on income noted in the 2SLS results suggests that the market demand path proposed by Turner, Hyden, and Kates (1993) may be a greater influ- ence on increased production than popula- tion pressure, given that decreases in hold- ing size do not generally lead to declining income per unit area.

Conclusions To summarize, smallholdings with 1.2 to

1.6 hectares (3-4 acres) under production can be identified as the farms operating under conditions of highly rational produc- tion, reflected by the highest coffee and maize yields and the highest income per hectare in the study area. The relationship between scale and net income, however, is statistically insignificant; larger farms do not necessarily have higher income per unit area, while commercial specialization and diversification, which were found to be highly correlated, have a strong effect on net income. The high correlation between commercial specialization and diversifica- tion may seem theoretically contradictory, since diversification implies a wide varia- tion in products, whereas commercial pro- duction involves the opposite, a narrowing variation of products. Survey results sug- gest that through diversification the small- holder is more readily able to select, from a wide variety of farm products, that crop or type of produce to be specialized for a given growing season or seasons. Intuitively, it would make sense that diver- sification leads to commercial production, though explicit causation cannot be proven. Nevertheless, diversified production may

allow the smallholder to more easily select a crop for commercial specialization.

Diversification and small-scale commer- cial production can be effective ways to not only increase yields, but to increase income and maximize opportunities from increas- ingly fragmented land holdings. Aside from the significant relationship between small- holder diversification and income, survey results also provide insights into the con- straints on increasing diversification. It is evident that arable land and capital avail- ability (that is, net farm-generated income) are among the primary constraints to increased diversification. Questionnaire responses to several survey items offer sup- porting evidence. Again, 63 percent of the respondents viewed land availability as a constraint on increased production, while 78 percent viewed capital availability as a significant constraint. Several respondents also noted that limits of capital availability prevented them from hiring labor, while others blamed low or delayed payments for coffee as a significant hindrance. The for- mer concern about land availability is legit- imate in light of the land use pressures that have intensified significantly over the past 25 to 30 years. As population densities increase and holdings are further subdi- vided among family members, farmers must find new ways of expanding produc- tion to maintain food supplies. Small- holders in Kirinyaga appear to expand out- put per hectare more on highly diversified farms of 1.2 to 1.6 hectares (3-4 acres) than on farms of less than 1.2 or greater than 1.6 hectares. Whether or not diversification decreases beyond a particular scale is uncertain; however, it is expected that large-scale production is not conducive to diversified production, yet this is a question deserving further investigation.

As discussed, smallholders face consid- erable risks in diversifying production, and favorable market conditions are critical to success. The instability of commercial cof- fee and specialized horticultural product markets pose significant obstacles to small- holder prosperity. The smallholders' per- ceived lack of control over prices and pay-

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ments for their coffee deliveries and input purchases may change as coffee sales con- tinue to recover from the slump experi- enced in the mid-1980s and early 1990s. Niche market development of certified organically grown coffee offers opportuni- ties from which diversified smallholder growers may be able to benefit. Although systems for improved payment on coffee deliveries may be slow in coming, there is some hope that capital availability will improve for smallholders. Less patient farmers, or those more willing to take risks, are not waiting for improvements in the coffee market. There are cash crops other than coffee, such as French beans, that offer fresh promise for commercial special- ization. With the willingness to take the risks inherent in commercial specialization, smallholders are certain to continue to pro- vide Kenya with an ample agricultural mar- ket base and, less directly, to stimulate rural development.

Findings related to the correlation among diversification, commercial produc- tion, income, and subsistence levels are rel- evant to conclusions regarding induced intensification theory and, although not the focus of this study, the closely related the- ory of induced innovation. Innovative prac- tices such as diversified and commercially specialized production may lead to greater income per hectare on increasingly smaller holdings. Renewed interests in strategies of intercropping and multicropping are other examples of redefining induced innovation and technological change. These issues underscore the need to examine small- holder farming systems that feature highly diversified production strategies and to return to the farm gate to reevaluate the course of agricultural change.

In reference to the theoretical issue of induced intensification, once again, results show that population increases may lead to decreasing farm size but do not necessarily lead to declines in income per unit area. However, net income per unit area is largely a function of how much food pro- duction goes toward consumption versus sales. If the majority of smallholder food

production goes toward household con- sumption, a smaller proportion goes to the market. It can then be inferred that two serious problems may arise as a result of high-level subsistence production. First, smallholders whose agricultural production is highly subsistence oriented have less capital to purchase food in times of eco- nomic hardship or food scarcity. More diversified production may relieve some of the pressure by reducing the degree to which these farmers produce solely for subsistence. Second, as urban populations increase, more people are at risk when there is little surplus food crop production. Current trends of population increase in Kenya give cause for alarm as more and more people populate both rural and urban areas, placing higher demand on small- holders to keep pace by increasing agricul- tural productivity. Through highly diversi- fied and commercially specialized production, many smallholders take risks to meet increasing demand, regardless of the decreases in farm size associated with intensification.

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