Effect of agricultural land rental market participation on agricultural income of small scale farmers in Kwale County, Kenya

Abstract

Kwale County has a vibrant agricultural land rental market due to its relative good climate and fertile soil. However, it is faced with several challenges including inefficiency use of resources such as land. There is evidence in Ethiopia and other parts of the world that participation in agricultural land rental markets can be a solution to solving food insecurity and land inequalities in Sub -Saharan Africa and the world at large. However, there are few studies which have been conducted in Kenya on agricultural land rental market. This study was conducted to fill this gap. The general objective of the study was to contribute to enhanced livelihood through improved effectiveness of agricultural land rental markets among small- scale farmers in Kwale County, Kenya. Specifically, it was to characterize the socioeconomic and institutional attributes of land rental market participants and to determine the socioeconomic and institutional factors influencing small scale farmer’s participation in the agricultural land rental market and its effect on agricultural income. A multi- stage sampling technique was used to obtain a sample size of 386 small scale farmers. Descriptive statistics, bivariate Probit, and a two stage Instrumental Variable approach were used in data analysis. Participants in land renting in were young (47 years), more educated and owned relatively small farms (2.05 acres) while the participants in renting out were relatively old (53 years), less educated and owned large pieces of land (8.08 acres). Transaction costs, access to extension services and ownership to oxen were the main determinants of land rental market participation. Finally, participation in agricultural land renting in had no significant influence on agricultural income. Therefore, the study recommends stakeholders to develop policies geared towards reduction in transaction costs and land rental prices. This could be through development in communication and road infrastructure to ease the access to information and agricultural land markets. There is a need for investment in the provision of affordable and quality formal education, up to date, relevant demand-driven extension services and low cost and readily available credit so as to encourage the participation in agricultural land rental market and increase agricultural income. There is also to heighten land equalization, policies that enhance reinvestment in agricultural assets such oxen, access to extension services and reduces transaction cost which is important in increasing the agricultural income of small scale farmers.