Production efficiency and economic potential of different soil fertility management strategies among groundnut farmers of Kenya

Abstract

This paper provides the economic evaluation of different soil fertility replenishing technologies (use of inorganic fertilizers, organic manure, and rhizobium inoculant) that were tested during field studies and recommended to groundnut farmers. Data on soil fertility technologies used by households, groundnut yields, and resource use and farm and farmers characteristics were collected through administration of a questionnaire to a sample of 332 farmers from three districts of western Kenya. The data was analyzed to determine whether adoption of the technologies would increase household incomes and production efficiency. Benefits and costs of each technology were computed through the use of budgets. Technical and allocative inefficiencies are investigated by fitting a Cobb-Douglas production function. The technical efficiency of the farmers varied between 0.56 and 0.69 while labor allocative efficiency varied between 0.81 and 0.93. Farmers applying organic fertilizers only were technically more efficient but had lower potential yield compared to farmers who applied inorganic or a combination of organic and inorganic fertilizers. Use of inorganic fertilizers lead to a benefit cost ratio of up to 3:1. Organic manure had the lowest benefit-cost ratio (2.2:1) even when compared with that obtained when farmers did not apply any fertility replenishing input resulting from high cost of labor required to use this technology. There is a high potential for farmers to increase their groundnut yields and incomes by improving on production efficiency and by fertilizing their
groundnut farms.

Key words: Cost-Benefit ratios, Groundnuts, Kenya, Production efficiency, Production function