Octobr, Vol, No ISSN: - Th Extnt to Which Capital Financing Affcts Productivity of Sd Maiz Growing: A Cas Study of Knya Sd Company in Trans Nzoia County, Knya David Kassim Matara David Kassim Matara School of Human Rsourc Dvlopmnt, Jomo Knyatta Univrsity of Scinc and Tchnology, Kital CBD Campus, P O Box -, Nairobi, Knya Email: davidmatara5@gmailcom Dr Mauric Sakwa School of Human Rsourc Dvlopmnt, Jomo Knyatta Univrsity of Scinc and Tchnology, Kital CBD Campus, Nairobi, Knya Wrunga Kikchi Dpartmnt of Educational Planning and Managmnt, Masind Muliro Univrsity of Scinc and Tchnology, Kakamga, Knya DOI: /IJARBSS/v-i/ URL: http://dxdoiorg//ijarbss/v-i/ Abstract To dtrmin th xtnt to which capital financing affcts th productivity of sd maiz growrs in Trans Nzoia County, w gathrd data from a sampl of sd maiz growrs, mploys of th sd maiz production dpartmnt and mploys of th financ dpartmnt Th study was guidd by th thory of social capital, thory of signaling crdit risk in agricultur and farm businsss and capital structur thory This study utilizd a dscriptiv survy rsarch dsign Th study found out that sd maiz growrs fac high intrst rats on crdit facilitis and a myriad challngs whil accssing crdit from Knya Sd Company Th findings of th study ar xpctd to hlp in th improvmnt on accss to crdit by sd maiz farmrs A furthr dtaild study is ndd on th ffct of sd maiz growrs financing by Knya Sd Company on productivity lvls at th rgional and possibly th national lvl Ky words: Capital financing, Productivity, Sd, Sd maiz growrs In Knya, th trm maiz is synonymous with th word food Maiz is th major stapl food crop and sourc of livlihood for majority of Knyans It is widly producd, dominats all national food scurity considrations and contributs highly to agricultural mploymnt (Jayn, Yamano, Nyoro & Awour, ; Nyoro, Karimi & Jayn, ) Th ara undr maiz cultivation has stabilizd at around 5 million wwwhrmarscom 5
Octobr, Vol, No ISSN: - hctars, producing about million bags of maiz pr annum This falls short of th annual domstic maiz consumption stimatd at million bags (FAO, ) Agricultural output is low in dvloping countris spcially in Knya du to small holdings, traditional mthods of farming, poor irrigation facilitis, low or misus of modrn farm tchnology tc (Zubri, ) This rsults in small incoms and no savings or small savings Thrfor, th nd to accss crdit in ordr for farmrs to apply and undrtak improvd farm practics Crdit is an important instrumnt that nabls farmrs to acquir commands ovr th us of working capital, fixd capital and consumption goods (Siddiqi, Wasif & Baluch, ) Crdit plays an important rol in incrasing agricultural productivity Timly availability of crdit nabls farmrs to purchas rquird inputs and machinry for carrying out farm oprations (Saboor, Maqsood, & Madiha, ) Owuor, D Groot and Wangia () obsrv that crdit can hlp farmrs incras thir productivity by obtaining farm inputs in a timly mannr for arly planting, improving crop managmnt practics such as application of frtilizrs, wd control, psts and disass control and timly harvsting which all lad to nhancd productivity and nhancd national sd availability Lack of crdit, on th othr hand, translats into inadquat working capital implying that farmrs ar unabl to purchas productivity-nhancing inputs such as hybrid sds, frtilizrs, and psticids and to carry out propr land prparation and gnral crop managmnt practics which rsult in improvd output in trms of yilds pr acr Balogun () obsrvs that crdit has long bn idntifid as a major input in th dvlopmnt of th agricultural sctor Crdit is considrd th catalyst that activats othr factors of production and maks undrusd capacitis functional for incrasd production (Ijr, ) It is a major factor ncssary for tchnological transfr in traditional agricultur (Oyatoy, ) Farm crdit can b obtaind from ithr formal sourcs which includ banks and othr govrnmnt ownd institutions or informal sourcs which ar slf-hlp groups, mony lndrs, cooprativs and non-govrnmnt organizations (NGOs) Th Financing Procss of Knya Sd Company and its Outrach Knya Sd Company has an laborat sd financing program Evry yar th company procurs ovr KShs 5 million worth of farm inputs Financing by Knya Sd Company is in th form of advancs to sd maiz growrs of cash or farm inputs such as basic sds, frtilizrs and agrochmicals to assist thm in nhancing sd productivity Th Company advancs cash to b usd by th growrs mainly in mting costs rlatd of crop managmnt such as wding, roguing, dtassling, psts and disas control and harvsting Timly action of ths crop managmnt activitis lads to improvd yilds of th sd maiz crop harvsts Th Company has a structurd inputs advancs approval procdur which all farmrs adhr to Information on accss to financing is providd through various outrach programs including xtnsion srvics, fild days and th annual rsarch fild day wwwhrmarscom 5
Octobr, Vol, No ISSN: - all of which th sd growrs ar xpctd to attnd To maintain contact with its sd growrs, th Company ntrs into yarly contracts with thm As pr th contracts, th sd growrs ar rquird to attnd and participat fully during th said fild days and th annual rsarch day for dissmination of nw and mrging sd tchnologis Th Company has also ncouragd its contractd sd growrs to sign up with th Ministry of Agricultur s Crdit Guarant Schm; an arrangmnt that th Ministry of Agricultur (MOA) has ntrd into with slctd financial institutions, namly, Equity bank, Cooprativ bank, Family bank and Knya Womn Financ Trust, to facilitat crdit xtnsion to farmrs in th agricultur sub-sctor This crdit guarant schm by th MOA to th financial institutions allows th institutions to advanc funds in xcss of KShs billion as loans to farmrs at an affordabl intrst rat of % pr annum It is against this background that th study st out to dtrmin th xtnt to which capital financing by Knya Sd Company and financial institutions affcts th productivity of sd maiz growrs in Trans Nzoia County Trans Nzoia County was slctd basd on its agricultural potntial, accssibility, agronomic practics, high lvls of maiz production and bing th County that hosts th Knya Sd Company, which is th rgional markt ladr in sd maiz production in Knya Mthodology Rsarch Dsign Th study mployd a dscriptiv survy rsarch dsign According to Kombo and Tromp (), dscriptiv studis ar dsignd to stablish facts and oftn rsult in formulation of important principls of knowldg and solutions to significant problms Thus, unlss rsarch first gnrats an accurat dscription of a phnomnon as it xists, it will lack a firm basis for xplaining or changing it Borg, Gall and Gall () add that dscriptiv rsarch is a typ of quantitativ rsarch that involvs making carful dscriptions of ducational phnomnon This dsign was dmd appropriat bcaus it has bn found to offrs to social scintists and othr ducators a systmatic and logical mthod of collcting data, for th purpos of masuring charactristics and dscribing populations that ar too larg to b obsrvd dirctly Sampl and Sampling Tchniqu From a population of sd maiz growrs in th thr districts of Trans Nzoia County, wr randomly slctd to form th final sampl siz for th study Th sd maiz growrs rprsntd % of th targt population to b usd in th study and this is considrd idal by O'Connor () who says that, thr ar formulas for dtrmining sampl siz, but th main thing is to b practical, and for a small population of intrst you would most likly nd to sampl about % and abov of th population Th study, howvr, put th sampl siz at % bcaus of th qustionnairs that might not hav bn rturnd or lost by th sd maiz growrs during data collction This nabld th rsarchr to gt at last % and abov of th total population filling th qustionnairs wwwhrmarscom 5
Octobr, Vol, No ISSN: - Stratifid sampling tchniqu was thn mployd in ordr to hav subjcts in various strata (districts) for subsqunt analysis that mad it asy to mak comparisons and draw conclusions This is a tchniqu that gnrally provids incrasd accuracy in sampl stimats To obtain a rprsntativ sampl, th sd maiz growrs wr formally classifid into thr catgoris according to thir district of origin Probability to proportion sampling tchniqu was thn usd to obtain th sampl siz from ach district All Knya Sd Company mploys in th financ dpartmnt (5) and sd production dpartmnt () participatd in th study bcaus thir numbrs wr small and managabl Th distribution of th rspondnts in th diffrnt strata for sd maiz growrs is as shown in tabl Tabl : Distribution of th sampl siz for Sd Maiz Growrs in Trans Nzoia County No District Sampl Siz of Sd Maiz Growrs Trans Nzoia East Trans Nzoia Wst Kwanza Total Data Collction Instrumnts Instrumnts wr dvlopd to gathr information from thr catgoris of rspondnts A qustionnair was usd as th main rsarch tool for this study, sinc it provids a mor comprhnsiv viw than any othr rsarch tool Th qustionnair was administrd to Sd Maiz Growrs to dtrmin th xtnt to which capital financing by Knya Sd Company has influncd thir crop productivity lvls Th qustionnair wr also administrd to staff in th dpartmnts of Financ and Sd Maiz Production of th Company to obtain information on financs or crdit provision by th Company and utilization of th said financ by th sd maiz growrs Th qustionnair was furthr usd to assss if th Company ralizs improvd crop yilds as a consqunc of th crdit advancd to th growrs RsultS Dmographic Information of th Rspondnts Th study xamind th following undr th dmographic information; ag, gndr, typ of farm ownd and thir distribution within th county, ducational lvls of sd maiz growrs, mmbrship to a cooprativ socity and xprinc of th farmrs in sd maiz growing Ag Distribution of Rspondnts Tabl points out that, all th sd maiz growrs, 55 mploys of Knya Sd Company in th financ and sd maiz production dpartmnts rspondd to th wwwhrmarscom 5
Octobr, Vol, No ISSN: - qustion on ag Th rsponss from sd maiz growrs indicat that most of thm (5%) ar in th 5 to yars ag brackt with anothr % in -5 rang, only % ar in th - rang and 55% in th abov yars of ag brackt Intrstingly, only % of th rspondnts ar blow th ag of yars Tabl : Ag distribution of sd maiz farmrs in Trans Nzoia County Yars Frquncy Prcntag - - -5 5-5 - Abov 5 55 Totals This suggsts that sd maiz farming is not vry attractiv to th youth in Trans Nzoia County It was also rvald that financial institutions as wll Knya Sd Company wr cautious in giving crdit to young popl bcaus of th qust to travl outsid th County in sarch of whit collar jobs in th middl of thir farming Sd maiz farming is thrfor lft mostly in th hands of th agd; a fact that may contribut to th low sd maiz production in th county On th rsponss from th mploys of Knya Sd Company in th financ and sd maiz production dpartmnts, it was obsrvd that most of thm (%) and (%) rspctivly wr in th ag brackt of - yars A fw (%) of th sd maiz production officrs wr in th ag brackt of - yars of ag (Tabl ) Tabl : Ag distribution of mploys of KENYA SEED COMPANY Financ & Sd Maiz Production dpartmnts Employs of th KENYA SEED COMPANY financ dpartmnt Employs of th KENYA SEED COMPANY sd production dpartmnt Yars Frqunc Prcntag Frqunc Prcntag wwwhrmarscom 5
Octobr, Vol, No ISSN: - y y - - - 5 5-5 5 Tota l 5 This implis that most of th sd maiz production officrs lack th xprinc to advic th sd maiz farmrs on financial mattrs and hnc farmrs nd up rciving inadquat advic on agronomy Gndr of th Rspondnts Tabl givs a summary of gndr distribution of sd growing farmrs and mploys in th financ and sd maiz production dpartmnts Th sd maiz farmrs wr mad up mals and fmals Though qual opportunity is givn to both mn and womn to accss financial assistanc from th Knya Sd Company and microcrdit facilitis, th ratio of mn to womn is about : This implis that in Trans Nzoia County, womn hav not takn a lading rol in ngaging in sd maiz growing, which might b partly du to issus of land ownrship, povrty, low lvls of ducation among womn and vn ignoranc Tabl : Summary of gndr distribution of sd growing farmrs and mploys in th financ and sd maiz production dpartmnts Sd Growrs Maiz Employs of th KENYA SEED COMPANY financ dpartmnt Employs of th KENYA SEED COMPANY sd production dpartmnt Gndr F % F % F % Mal 5 Fmal Totals 5 Not: F=Frquncy, % = Prcntag wwwhrmarscom 55
Octobr, Vol, No ISSN: - Typ of Farm Ownd by th Sd Maiz Farmrs Tabl 5 shows that most of th farmrs (%) ownd mdium scal farms with Trans Nzoia East having th majority (5%) of thm Only % of th farmrs in th whol county own larg scal farms, with Trans Nzoia East, Trans Nzoia wst and Kwanza owning 5%, % and % of thm growing sd maiz rspctivly Only % of th farmrs own small scal farms which thy us for sd maiz growing Tabl 5: Typ of farm ownd by sd maiz growrs and thir district Mdium scal Larg scal farm farm Small scal farm Distric F % F % F % t Trans Nzoia East 5 5 Trans Nzoia wst Kwanz a Totals Not: F=Frquncy, % = Prcntag 5 This implis that most sd maiz that Knya Sd Company rcivs coms from Trans Nzoia East and thrfor growrs in that rgion ar bound to b visitd mor for offrs of agricultural xtnsion advic than any of thos who com from Trans Nzoia wst or Kwanza districts This shows why Trans Nzoia East might b doing wll in trms of productivity of sd maiz growing Educational lvl of Sd Maiz Farmrs Figur show that most of th farmrs (%) hav scondary school ducation whil only 5% and % hav collg and univrsity ducation rspctivly A small numbr (%) had no formal ducation at all Only 5% of th rspondnts hav primary ducation wwwhrmarscom 5
Octobr, Vol, No ISSN: - Figur : A chart showing th lvl of ducation of sd maiz growrs This implis that only a small proportion of farmrs (with univrsity and collg ducation) undrstand th importanc of accssing financial assistanc in ordr to improv on th sd maiz yilds 5 Sd Maiz Farming Exprinc Tabl shows that thr wr vry fw sd maiz growrs (%) with an xprinc of mor than yars This might b du to th challngs facd during sd farming which mak a good numbr withdraw from sd maiz farming This implis that sd maiz growrs with mor xprinc in sd maiz farming ar bound to gt highr yilds than thos with lss xprinc Tabl : Sd maiz growrs xprinc in th fild of sd maiz farming Sd maiz growrs Exprinc Frquncy Prcntag -5 yars - yars Abov yars Totals Th ffcts of capital financing on th Productivity of Sd Maiz Growrs in Trans Nzoia County Th rspondnts wr askd about th main sourc of capital financing for thir sd maiz farming and th majority (5%) rspondd that thy gt thir capital financing from commrcial banks as a crdit facility whil % said thy gt crdit to financ thir sd farming businsss from cooprativ socitis A fairly good numbr (%) do financ thir sd maiz farming from own savings whil % of th farmrs gt thir financs from othr sourcs such as micro financs, family or prsonal frinds (s tabl ) wwwhrmarscom 5
Octobr, Vol, No ISSN: - Tabl : Sd maiz growrs sourc of capital financ Sourcs of capital financ Frquncy Prcntag Commrcial banks 5 5 Cooprativ socitis Own savings Othr sourcs Totals Th sd maiz growrs wr also askd to rspond on th xtnt to which capital financing has assistd thm in sd maiz farming Tabl shows that many of thm agrd (5%) or strongly agrd (%) that accss to capital financing assistd thm to attain high yilds in sd maiz farming Only a fw (%) disagrd or strongly disagrd that accss to capital financing assists thm in attaining high sd maiz yilds Tabl : Sd Maiz Growrs rsponss on th ffcts of capital financing on productivity of sd maiz in Trans Nzoia County Effcts of capital financing on productivity of sd maiz farming Stro ngly Agr A g r % % % % % N o t S u r D is a g r S t r o n g l y D i s a g r Accss to capital financing assists m to attain high sd maiz yilds 5 Accss to capital financing has assistd m us bttr farm machinry on th farm Accss to capital financing has assistd m 5 wwwhrmarscom 5
Octobr, Vol, No ISSN: - us bttr farming mthods Accss to capital financing has assistd m gt mor ducatd farm workrs Accss to capital financing has mad m los my proprty through auction 5 Short rpaymnt priod limits m from borrowing mor funds for sd maiz farming I dpnd on my prsonal savings and not crdit financ to produc sd maiz I usually us my assts as collatral whn borrowing a bank loan 55 5 5 Loans acquird ar always accompanid by short rpaymnt priod 5 Th yild acquird aftr acquiring crdit financ is bttr than that acquird whn using mrgr prsonal savings Accss to capital financing has assistd m cushion som challngs I ncountr in sd maiz farming 5 5 Tabl also shows that a majority of th sd maiz growrs (55%) also ithr agrd or strongly agrd that accss to capital financing from commrcial banks or micro financ institutions has assistd thm to acquir and mak us of fficint farm machinris It also assistd thm to ithr buy thir own farm machinris or las from altrnativs availabl wwwhrmarscom 5
Octobr, Vol, No ISSN: - Discussion and Conclusion Th issu of gndr in productivity has rcivd a fair shar of rsarch attntion Earl () obsrvs that financial institutions always focus in aras whr th rturns to thir invstmnts ar always high whil Gotz and Gupta () obsrv that mn ar mor likly to go for crdit facilitis than womn Thy also mak a similar argumnt that it is mostly th mn of th housholds and not th womn who actually xrcis control on borrowing Most farmrs had scondary school ducation whil only a fw hav collg and univrsity ducation rspctivly A small proportion of th maiz sd growrs had no formal ducation at all Fiv prcnt of th rspondnts had primary ducation This implis that only a fw of farmrs who had univrsity and collg ducation could undrstand th importanc of accssing financial assistanc in ordr to improv on thir sd maiz yilds Applton and Balihuta () found a positiv rlationship btwn ducation lvl and houshold agricultural output This is consistnt with studis don by Fasorant (); Oladbo (); Oluwatosin (); Adymo, Ok, and Akinola (), Amos, Chikwndu, and Nmadu () and Adjoh () which found out that mor ducatd farmrs ar mor likly to accss financial facilitis availabl and adopt progrssiv farming practics and nw tchnologis and thus incras thir ovrall fficincy and farm yilds Th study also found that vry fw sd maiz growrs ar mmbrs of cooprativ socitis This indicats that thy rarly bnfit from th financial facilitis offrd by cooprativ socitis fully This implis that sd maiz farmrs nd to join cooprativ socitis to njoy th financial and othr srvics providd for by th cooprativ socitis This will lad to incrasd rats of rturn on thir sd maiz pr yar Th study also stablishd that sd maiz growrs main sourc of capital for thir sd maiz farming was from commrcial banks as a crdit facility Thy also do gt capital to financ thir sd maiz farming from cooprativ socitis, own savings and othr sourcs such as micro financs, family or prsonal frinds and shylocks in Kital town rspctivly Many of th sd maiz growrs wr in agrmnt that accss to capital financing assistd thm to attain high yilds in sd maiz farming This did not corroborat with Pk () who obsrvd that xprinc in farming plays a vry important rol in productivity Exprinc brings along bttr farming mthods and bttr utilization of crdit facilitis Only a fw disagrd or strongly disagrd that accss to capital financing assists thm in attaining high sd maiz yilds Capital financing from commrcial banks or micro financ institutions has assistd a majority of th sd maiz growrs to accss or us bttr farm machinry than th financial wwwhrmarscom 5
Octobr, Vol, No ISSN: - assistanc from Knya Sd Company It assistd thm to ithr buy thir own farm machinry or las th bst from all th altrnativs availabl Rfrncs Adjoh, S D () Analysis of Production Efficincy and Profitability Of Yam-Basd Production Systms In Ijunmu LGA of Kogi Stat Msc Thsis Dpartmnt of Agricultural Economics And Extnsion, Ahmadu-Bllo Univrsity, Zaria Adymo, R J, Ok, T O, & Akinola, A A, () Economic Efficincy of Small Scal Farmrs In Ogun Stat, Nigria Tropicultura () Amos, T T, Chikwndu, D O, & Nmadu, J N, () Productivity, tchnical fficincy and cropping pattrns in th savanna zon of Nigria J Food Agric Environ : - Applton, S & Balihuta, A (: ) Education and Agricultural Productivity: Evidnc from Uganda Journal of Intrnational Dvlopmnt, () Balogun, E D, () Banking and Crdit Facilitis for Intgratd Rural Dvlopmnt; Papr prsntd at th National Sminar on Rural Dvlopmnt Policy in Nigria, Shraton Hotl, Abuja Borg, W R, Gall, M D, & Gall, J P () Educational Rsarch - An Introduction, Nw York: Longman FAO, () Towards ffctiv and sustainabl sd rlif srvics FAO Plant Production and Protction Papr Fasoranti, M M, () A Stochastic Frontir Analysis of Effctivnss Of Cassava- Basd Cropping Systms In Ondo Stat, Nigria Phd Thsis, Dpartmnt of Agricultural Economics and Extnsion, FUTA, Akur Gotz, A and Gupta, S () Who Taks th Crdit? Gndr, Powr, and Control ovr Loan Us in Rural Crdit programs in Bangladsh World Dvlopmnt, (): 5- Ijr, M O () Agricultural Crdit and Economic Dvlopmnt In: Ijr, MO and Okoris, A (ds), Rading in Agricultural Financ, Longman, Lagos, pp Jayn, T S, Yamano, T, Nyoro, J and Awour T () Do Farmrs Rally Bnfit From High Food Prics Balanc Rural Intrsts in Knya s Maiz Pricing and Markting Policy Working Papr b, Tgmo Institut, Nairobi, Knya wwwhrmarscom 5
Octobr, Vol, No ISSN: - Nyoro, J, Kirimi, L and Jayn, T S (), Comptitivnss of Knyan and Ugandan maiz production: Challngs for th futur,working Papr, Egrton Univrsity, Tgmo Institut, Nairobi Oladbo, J O, () Economic Efficincy of Rain-Fd Upland Ric Production in Osun and Oyo Stats of Nigria Phd Thsis Dpartmnt of Agricultural Economics and Extnsion, FUTA, Akur Oluwatosin, F M () Masuring Tchnical Efficincy Of Yam Farmrs In Nigria: A Stochastic Paramtric Approach Agricultural Journals () Owour, G, D Groot & Wangia, M, () Impact of slf-hlp groups crdit on input us in maiz production in Siaya, Knya Svnth astrn and Southrn Africa Rgional Maiz Confrnc th 5 th Fbruary, Pp - Oyatoy, ETO, () Financing Small Scal Farmrs: A Chang of Stratgy, In: Edordu (Ed), Agricultural Crdit and Financ in Nigria, Problms and Prospcts Procdings of a Sminar Organizd by th Cntral Bank of Nigria, April - Pk, O R, () Economic Analysis of Food Crop Farming Undr Ekiti Stat ADP Msc Thsis, Dpartmnt of Agricultural Economics And Extnsion, FUTA, Akur Saboor, A, Maqsood, H, & Madiha, M, (), Impact of micro crdit in allviating povrty: An Insight from rural Rawalpindi, Pakistan, Pak j lif soc sci (), (): Pp- Siddiqi, M, Wasif M, Baluch K N, (), Institutional crdit: A policy tool for nhancmnt of agricultural incom of Pakistan Intrnational Rsarch Journal of Arts & Humanitis (IRJAH) Vol Zubri, HA (), Production function, institutional crdit and agricultur dvlopmnt in Pakistan Th Pakistan Dvlopmnt Rviw :Pakistan Institut of Dvlopmnt Economics, Islamabad wwwhrmarscom 5