IMPACT OF PURCHASE FOR PROGRESS (P4P) PROJECT ON FARM INCOMES IN KENYA (CASE OF TRANSMARA AND ELDORET EAST DISTRICTS ) PRESENTED BY JUDITH.M.MUTUKU SUPERVISORS: DR. NZUMA DR. IRUNGU CMAAE THESES DISSEMINATION WORKSHOP

PRESENTATION OUTLINE Introduction Problem Statement Objectives Hypotheses Justification Methodology Results and Discussion Conclusion and Policy Implications

INTRODUCTION  WFP assists about 90 million people per year food in over 70 countries  Purchase for progress (P4P) is a programme implemented by the WFP in 21 countries in parts of Africa, Central America and Asia.  P4P is a 5 year pilot project implemented in Kenya in 2009 with an aim of moving smallholder farmer groups from informal into structured trade.  In Kenya, targeted areas were Eastern, Rift valley and western provinces.

INTRO ….  The P4P project in Kenya works closely with the Ministry of Agriculture and partners such as CGA, AGMARK,AMPATH, KACE, farmers and agro- dealers.  The partners assist farmers in meeting WFP quality requirements and capacity building to participate in market.

PROBLEM STATEMENT  The P4P project has been in operation for three years since 2009 with reported achievements and challenges.  However, the impact of P4P project on farmer’s income is largely unknown in Kenya thus the need for reliable empirical evaluations that provide evidence on its impacts  It is also not known whether the P4P project has increased agricultural production, improved post- harvest handling and marketing choices.

PURPOSE AND OBJECTIVES Overall Objective: To quantify the impact of WFP’s P4P project on farm incomes among the smallholder farmers in Uasin Gishu and Narok counties in Kenya. Specific objectives:  Assess the differences in maize gross margins between P4P participants and non-participants.  Evaluate the impact of the P4P project on maize gross margins Hypotheses Tested  There are no differences in the maize gross margins between P4P participants and non-participants  Participating in P4P has no effect on maize gross margins

METHODOLOGY Economic theory; Random Utility Model theory(RUM) First objective: Gross margin analysis Where TR= revenue, TVC=variable cost, P=price of maize Q = quantity of maize produced.

…  Second objective: PSM  First step; logit model; Participation Eqn: = 1 and 0 otherwise) = βo+ β 1 AGE + β 2 EDUC + β 3 GENDER + β 4 CREDIT + β 5 HHSIZE + β 6 FARMSIZE + β 7 MZPRICE + β 8 EXTN + β 9 DISTANCE + β 10 FOMEMBER + β 11 OCCUPATION + e (error term )  Second Step: PSM Matching Methods  Where a is a constant, b measures impact of P4P on mean output, c is the average treatment effect, R i - dummy variable = 1 if farmer i participates in P4P project and 0 otherwise, X i are propensity scores from the preceding logit model and e i is the error term

RESULTS AND DISCUSSION AttributeUasin Gishu county Narok county Mean- P4P (N=57) Mean-Non- P4P (N=69) t-testMean- P4P (N=57) Mean-Non- P4P (N=69) t-test Age (years)45 (1.58) 47 (1.76) 44 (1.48) 38 (1.16) ** HHsize – persons 6 (0.32) 6 (0.425) 8 (0.433) 7 (0.445) Years of schooling 10 (0.457) 9 (0.41) 7 9 ** Farm size (acres) 6 (1.44) 5 (0.73) 14 (3.88) 22 (3.88) Price of 90 kg- bag of maize (KShs) 2946 (31.18) 2620 (34.02) ***3125 (37.20) 3086 (54.53) *** Maize yield (90kg-bag / acre) 21 (0.31) 19 (0.49) **20 (1.82) 15 (0.58) ** Gross margin/ Farm income: Kshs/ha/year) (708.09) (990.22) ***34877 (716.05) (676.53) *** Distance to the P4P store (Kms) 16 (1.44) 10 (1.05) **11 (2.11) 12 (1.40)

RESULTS AND DISCUSSION First Objective- Gross margin analysis The difference in mean between the P4P participants and non participants was statistically significant at 1 percent –reject null hypothesis. Farm income (Ksh / acre/year) Mean Mean difference t- statistics P4P farmers *8.886 Non P4P farmers

DETERMINANTS OF PARTICIPATION Maximum likelihood estimates Marginal effects Variables Coefficientp-valueCoefficientp-value Gender ** Age Education Occupation Hldsize Farm size* Price*** market extension*** credit***

DISTRIBUTION OF PROPENSITY SCORES AND AREA OF COMMON SUPPORT P-value of the logit model = model fits the data well Propensity Score UntreatedTreated

IMPACT OF P4P PARTICIPATION ON FARMERS INCOME MatchingSampleTreatedControl Differen ce Std error T stat Unmatc hed NNM ATT ATU ATE ** KBM ATT ATU ATE ** RMATT ATU ATE **

CONCLUSIONS P4P project has;  Increased participants incomes by 7245ksh/acre/year (NNM)  Increased participants productivity by 3-90 kg bags/acre  Created a ready market for maize  Improved participants access to credit especially through partnership with equity bank  Improved participants access to extension through its partners like MoA, CGA etc  Improved collective marketing through FOs

POLICY IMPLICATIONS  Need to encourage farmers to participate in P4P project for better prices and assured market  The government and other institutions that lend credit should design better policies for credit packages that are tailor-made for farmers-fair collateral  The government should enhance extension services through extension personnel to equip farmers with the appropriate knowledge to improve farm productivity.  Policies which encourage farmers to market collectively should be enacted as well as timely payments to avoid delayed payments

THANK YOU GOD BLESS