Agriculture and Livelihood Diversification Agriculture and Livelihood Diversification in Kenyan Rural Householdsin Kenyan Rural Households

Simon C. Kimenju Simon C. Kimenju

and and

David TschirleyDavid Tschirley

Tegemeo Institute Conference: Agriculture Productivity, Competitiveness and Rural Poverty in

Kenya-Laying the Foundation for V203017th-18th September 2008

Outline What do we mean by diversification? Diversification/specialization and agricultural

development Key findings

Trends in hh portfolios and levels of diversification Regionally, by type of hh

Policy and programmatic implications

Diversification and Specialization Diversification refers to how broadly a rural hh

distributes its economic efforts A diversified hh distributes its efforts across many

activities E.g., food crops, several cash crops, livestock, and off-farm

A specialized household distributes its efforts across few activities E.g., focuses on a few cash crops and buys most of its food

Diversification and specialization are the inverse of each other

Diversification & Ag Development Many countries in Africa wish to promote greater

“diversification” among farmers Kenya’s government also promotes this in SRA:

“increasing the growth of the sector by encouraging farmers to diversify farming into non-traditional high value crops”

Yet Vision 2030 sees a problem in too much diversification: “The proliferation of enterprises … on a typical small-scale farm …

reflects lack of specialization due to risk and lack of organized marketing”

Vision 2030 recognizes that specialization is needed in long-run to drive income growth and reduce poverty

Diversification & Ag Development (2) Bottom line

In early stages of ag development, hhs can benefit from greater diversification E.g., adding cash crops to the food crop portfolio E.g., adding off-farm to the farm portfolio

But as the economy develops, as cities grow, and as barriers to local, regional, and international are reduced, those farmers who can will increasingly specialize

Over time, those that do not specialize will either be pushed out of agriculture or will remain poor

Diversification & Ag Development (3) Whether diversification is positive or negative for a

hh depends on the stage of development of the agricultural sector and the household’s position in it E.g., more isolated households may need to diversify But households near large markets probably want to

specialize to serve that market Understanding a country’s stage of ag development

is important for designing proper policies, programs, and technology packages

Objectives Examine trends in portfolios to see which

enterprises are becoming important to rural hhs

Determine levels of diversification for different zones and types of households Using a Diversification Index

Highlight policy and programmatic implications

Household income sources

  1997 2000 2004 2007

Crop 40 50 46 44

Livestock 21 15 16 16

Business 13 17 17 21

Salaries 27 18 21 18

Share of household income from various sources

Household income sources

  1997 2000 2004 2007

Crop 40 50 46 44

Livestock 21 15 16 16

Business 13 17 17 21

Salaries 27 18 21 18

Share of household income from various sources

60/40 balance each year:No real change between ag and non-ag

61

40

60

39

Household income sources

  1997 2000 2004 2007

Crop 40 50 46 44

Livestock 21 15 16 16

Business 13 17 17 21

Salaries 27 18 21 18

Share of household income from various sources

Business has grown substantially

Off-farm business (real income)

Off-farm business (real income)

Rapidly and widely increasing earnings

Off-farm business (real income)

Widely increased participation

Mean number of cropsAgro-regional zones 2000 2004 2007

Coastal Lowlands 14.2 10.5 9.8

Eastern Lowlands 14.8 14.8 11.6

Western Lowlands 8.6 11.8 11.5

Western Transitional 12.1 12.3 9.8

High Potential Maize Zone 11.1 11.2 8.6

Western Highlands 11.6 14.6 13.5

Central Highlands 15 17.6 14.2

Marginal Rain Shadow 7.5 10.5 8.2

Overall 12.2 13.3 11.0

Mean number of cropsAgro-regional zones 2000 2004 2007

Coastal Lowlands 14.2 10.5 9.8

Eastern Lowlands 14.8 14.8 11.6

Western Lowlands 8.6 11.8 11.5

Western Transitional 12.1 12.3 9.8

High Potential Maize Zone 11.1 11.2 8.6

Western Highlands 11.6 14.6 13.5

Central Highlands 15 17.6 14.2

Marginal Rain Shadow 7.5 10.5 8.2

Overall 12.2 13.3 11.0

Reduced number of crops in all zones – more specialization?

Share of area to tea, coffee and sugarcaneShare of area to tea, coffee and sugarcaneZone 1997 2000 2004 2007

Tea

High Potential Maize Zone 0.05 0.04 0.04 0.05

Western Highlands 0.08 0.07 0.08 0.08

Central Highlands 0.16 0.17 0.17 0.17

Total 0.05 0.05 0.05 0.05

Coffee

Eastern Lowlands 0.06 0.04 0.04 0.03

High Potential Maize Zone 0.00 0.01 0.01 0.01

Western Highlands 0.17 0.22 0.11 0.10

Central Highlands 0.16 0.17 0.16 0.17

Total 0.06 0.06 0.05 0.05

Sugarcane

Western Lowlands 0.10 0.09 0.09 0.07

Western Transitional 0.40 0.36 0.37 0.41

Total 0.06 0.05 0.05 0.06

Share of area to tea, coffee and sugarcaneShare of area to tea, coffee and sugarcaneZone 1997 2000 2004 2007

Tea

High Potential Maize Zone 0.05 0.04 0.04 0.05

Western Highlands 0.08 0.07 0.08 0.08

Central Highlands 0.16 0.17 0.17 0.17

Total 0.05 0.05 0.05 0.05

Coffee

Eastern Lowlands 0.06 0.04 0.04 0.03

High Potential Maize Zone 0.00 0.01 0.01 0.01

Western Highlands 0.17 0.22 0.11 0.10

Central Highlands 0.16 0.17 0.16 0.17

Total 0.06 0.06 0.05 0.05

Sugarcane

Western Lowlands 0.10 0.09 0.09 0.07

Western Transitional 0.40 0.36 0.37 0.41

Total 0.06 0.05 0.05 0.06

Steady throughout

Falling

Falling

Steady

Share of area to fodderShare of area to fodder

Zone 1997 2000 2004 2007

Coastal Lowlands 0 0 0 0

Eastern Lowlands 0.02 0.06 0.09 0.23

Western Lowlands 0 0 0 0.01

Western Transitional 0.01 0.02 0.01 0.05

High Potential Maize Zone 0.02 0.03 0.05 0.09

Western Highlands 0.04 0.12 0.12 0.11

Central Highlands 0.09 0.17 0.15 0.22

Marginal Rain Shadow 0.01 0.11 0.10 0.34

Overall 0.03 0.06 0.07 0.12

Share of area to fodderShare of area to fodder

Zone 1997 2000 2004 2007

Coastal Lowlands 0 0 0 0

Eastern Lowlands 0.02 0.06 0.09 0.23

Western Lowlands 0 0 0 0.01

Western Transitional 0.01 0.02 0.01 0.05

High Potential Maize Zone 0.02 0.03 0.05 0.09

Western Highlands 0.04 0.12 0.12 0.11

Central Highlands 0.09 0.17 0.15 0.22

Marginal Rain Shadow 0.01 0.11 0.10 0.34

Overall 0.03 0.06 0.07 0.12

Rapid growth in all zones apart from Coastal Lowlands

Proportion of Improved CattleProportion of Improved Cattle

Zone 1997 2000 2004 2007

Coastal Lowlands 0.00 0.00 0.17 0.13

Eastern Lowlands 0.23 0.28 0.45 0.36

Western Lowlands 0.02 0.03 0.01 0.00

Western Transitional 0.18 0.23 0.24 0.27

High Potential Maize Zone 0.70 0.81 0.81 0.82

Western Highlands 0.29 0.61 0.62 0.67

Central Highlands 0.94 0.96 0.95 0.95

Marginal Rain Shadow 0.58 0.72 0.71 0.79

Total 0.52 0.61 0.62 0.61

Proportion of Improved CattleProportion of Improved Cattle

Zone 1997 2000 2004 2007

Coastal Lowlands 0.00 0.00 0.17 0.13

Eastern Lowlands 0.23 0.28 0.45 0.36

Western Lowlands 0.02 0.03 0.01 0.00

Western Transitional 0.18 0.23 0.24 0.27

High Potential Maize Zone 0.70 0.81 0.81 0.82

Western Highlands 0.29 0.61 0.62 0.67

Central Highlands 0.94 0.96 0.95 0.95

Marginal Rain Shadow 0.58 0.72 0.71 0.79

Total 0.52 0.61 0.62 0.61

Proportion highest in Central Highlands, HPMZ, and MRS

Proportion of Improved CattleProportion of Improved Cattle

Zone 1997 2000 2004 2007

Coastal Lowlands 0.00 0.00 0.17 0.13

Eastern Lowlands 0.23 0.28 0.45 0.36

Western Lowlands 0.02 0.03 0.01 0.00

Western Transitional 0.18 0.23 0.24 0.27

High Potential Maize Zone 0.70 0.81 0.81 0.82

Western Highlands 0.29 0.61 0.62 0.67

Central Highlands 0.94 0.96 0.95 0.95

Marginal Rain Shadow 0.58 0.72 0.71 0.79

Total 0.52 0.61 0.62 0.61

But improving in almost all zones

Proportion of Improved CattleProportion of Improved Cattle

Zone 1997 2000 2004 2007

Coastal Lowlands 0.00 0.00 0.17 0.13

Eastern Lowlands 0.23 0.28 0.45 0.36

Western Lowlands 0.02 0.03 0.01 0.00

Western Transitional 0.18 0.23 0.24 0.27

High Potential Maize Zone 0.70 0.81 0.81 0.82

Western Highlands 0.29 0.61 0.62 0.67

Central Highlands 0.94 0.96 0.95 0.95

Marginal Rain Shadow 0.58 0.72 0.71 0.79

Total 0.52 0.61 0.62 0.61

(Not shown) Also higher for higher income households (70-79% vs. 26-33%) but improving for all income groups

Diversification Indices Crop diversification

Number of crop categories and share of each in gross value

Agricultural diversification Number of crop + livestock categories and share of each

in gross value Livelihood diversification

Number of crop + livestock + off-farm categories and share of each in gross value

We will focus just on crop and livelihood

Diversification Indices (2)

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1997 2000 2004 2007

Year

Div

ers

ific

ati

on

In

de

x

Crop diversification-Increases, then falls-Begins of crop specialization

Livelihood diversification- Increases throughout

Specializing zones (in crops)

Diversifying zones (in crops)

Richer HHs are more specialized

- Each year, higher income = less diversification (more specialization)

-Richer hhs specialized more dramatically than others between 2004 and 2007

Additional findings Better local infrastructure allows households

that were far from roads and services to benefit through diversification …

While proximity to a major market (large city) is an important driver of crop specialization Opportunity to sell large quantities of fresh

produce or other crops

Policy & programmatic implications Kenya may be at a turning point in crop ag

From increasing diversification to increasing specialization Previously, most hhs benefited from diversification But in future more will benefit by specializing, in

response to policy liberalization and urbanization

So policies and programs need to change in response to this turning point

Policy & programmatic implications (2) Policies for “an innovative, commercially

oriented and modern agricultural sector” More high yielding tech packages even if more

risky Extension messages more finely tuned to each farmer

Access to the right inputs at the right time Be sure that government programs do not undermine

private sector input development More collaboration with private sector

Policy & programmatic implications (3) More supply chain efficiencies

Market information Physical market places Cold chains Must be conceived and implemented in a highly

collaborative fashion with private sector Better risk management

Forward contracts Commodity exchanges Early warning for pest and disease infestations Crop insurance

Policy & programmatic implications (4) While specialization is beginning in ag,

diversification continues into non-ag Micro-credit, training for SME Primary and secondary education

Other research shows that individuals need secondary education, not just primary, to take advantage of off-farm opportunities