Assessment of Profit Efficiency of Smallholder Potato Farmers in Nakuru County, Kenya

Abstract

The importance of potato (Solanum Tuberosum L) production to the country's economic growth is quite clear, but little is known about its profitability and determinants. The current potato yields of smallholder farmers are less than 10 t/ha, against 40 t/ha achievable under optimum utilization of resources and recommended agronomic practices. The objective of the study was to assess the gross margin (GM) of smallholder potato farmers and estimate their profit efficiency level and influencing factors. A cross-sectional research design and multistage sampling technique were used to obtain a sample of 277 respondents for the study. Results indicated an average GM of Ksh 57,438 per ha per season, implying that potato farming is a lucrative enterprise. Despite this, the study further showed that there are profit inefficiencies in its production process. The average profit efficiency recorded was 43.5%, implying that potato farmers can potentially increase their profits up to 56.5%. Profit efficiency was found to increase significantly with access to extension and credit services, education level, non-farm income, and membership in farmer groups, while decreasing significantly with farmer age. Apart from optimizing the use of farm inputs, the profit efficiency of smallholder potato farmers can thus be improved by enhancing farmer education and extension service delivery, formulating favorable credit strategies that will make loan acquisition easier for potato farmers, and encouraging farmers to join farmer groups in order to benefit from economies of scale.