An economic analysis of Rice production in Mwea irrigation scheme

Abstract

This study aimed at comparing the economics of rice production for two different groups of farmers in Mwea Irrigation Scheme (MIS). One group is under the management of Mwea Multi-Purpose Rice Growers (MMRG) and grows a single crop of rice in a year without rotation. The other group is composed of the sons and daughters of MMRG tenant farmers and grows a double crop of rice in a year. It is however not clear which of the two production systems is efficient or realises higher returns to farmers. The objectives of the study were: (i) to identify major resources used by rice farmers and determine which resources significantly influenced rice output, (ii) to evaluate and compare the technical efficiency levels of both groups of farmers, (iii) to determine if both groups of farmers were allocating the identified physical resources efficiently, and (iv) to evaluate and compare the profitability of rice production in and outside the cooperative society. A total of 106 farmers were interviewed, 61 being MMRG-dependent and 45 from non-MMRG group. Data collected was fitted to a stochastic frontier production function model of the Cobb-Douglas type. Regression coefficients and farm specific technical efficiency levels were estimated using the Maximum Likelihood Estimate (MLE) teichnique. Efficiency of resource use was evaluated from the ratios of MVP:MFC. The results of the study showed that labor, mechanized tractor power, chemical fertilizer, pesticides, seeds, land and irrigation water significantly influenced rice output at I% significance level in the MMRG farms. Labor, however, had a negative coefficient while animal draught power was not significant in explaining rice output variation even at 10% significance level. For the non-MMRG farmers, mechanized tractor power, chemical fertilizers, pesticides, land and irrigation water were all significant at 1% level of significance while labor and animal draught power were significant at 5% level. For this group, seed quantity coefficient was not significant even at 10% significance level. Tractor power, pesticides and irrigation water had negative coefficients. The results on technical efficiencies indicated that MMRG dependent farmers were more technically efficient than MMRG independent farmers, and there was actually a statistically significant difference in technical efficiency levels between the single-crop M MRG dependent farmers and t he double-crop non-MMRG farmers. Further, an analysis of the determinants of technical efficiency indicated that farmers' specific characteristics e.g. farming experience (age) and education level as well as institutional factors like access to credit and extension facilities are important factors in determining the level of technical efficiency. The test for allocative efficiency indicated that labor, tractor power, fertilizer, pesticides and seeds were inefficiently used and only irrigation water was efficiently used in MMRG dependent farms. For non-MMRG independent farms, these resources were inefficiently allocated though the seed input was not statistically significant in explaining rice output variability. Both groups were found either underutilizing or overutilizing the resources used in rice production. Gross margin per hectare per year in MMRG dependent farms was Kshs. 42,695.17 and Kshs. 54,653.75 for non-MMRG farms. A test for any statistically significant difference in the two group's gross margins revealed that they were statistically different and that rice production under cooperative society is less profitable than outside the society. The study thus recommended: One, the Governments should facilitate the availability of credit and extension services to farmers, two, the research institutes should undertake a thorough extension exercise to advise all the Scheme farmers on t he recommended input usage and application rates, three, there is need for rigorous campaign from the Government, politicians and development partners aimed at educating the young farmers on the benefits of a single rice crop in a year, and four, the Government should oversee the revision and harmonization of MMRG structure of agreement with the Scheme tenants to avoid exploitation.