Economic analysis of beef cattle farmers' technical efficiency and willingness to comply with disease free zones in Kenya

Abstract

In Kenya, the cattle enterprise is an important source of livelihood for many farmers. However, lack of analytical evidence on efficiency levels of farmers in various production systems constrains policy making on optimal resource allocation. In addition, inability to control livestock diseases, such as Foot and Mouth Disease (FMD), has led to low beef supply in Kenya and loss of export markets. Although the government of Kenya plans to establish Disease Free Zones (DFZs) to address the disease challenge, there is no empirical evidence on farmers’ willingness to comply with DFZs. This study analyses farmers’ technical efficiency (TE) and willingness to comply with DFZs, across three main cattle production systems in Kenya. Primary data were gathered through household surveys using a structured questionnaire and a choice experiment (CE) based on a D-optimal design. The stochastic metafrontier model was applied to estimate TE and technology gaps across farms. Subsequently, possible determinants of TE were assessed using a Tobit model. In addition, farmers’ preferences for DFZ attributes and various possible policy scenarios were investigated using a random parameter logit (RPL) model. Results show that there is significant inefficiency in both the nomadic and agro-pastoral systems, but less in ranches. Further, in contrast with the other two systems, ranches are found to have higher meta-technology ratios (MTRs). The average pooled TE with respect to the metafrontier is estimated to be 0.69, which suggests that there is considerable scope to improve beef production in Kenya. The main factors that are found to have a positive influence on TE include: use of controlled cattle breeding method, access to market contract, presence of farm manager, off-farm income and larger herd size. The findings also show that farmers would be willing to pay to participate in a DFZ where: adequate training is provided on pasture development, record keeping and disease monitoring; market information is provided and sales contract opportunities are guaranteed; cattle are properly labelled for ease of identification; and some monetary compensation is provided in the event that cattle die due to severe disease outbreaks. In general, there is a higher preference for DFZ policy scenarios that incorporate training, and market information and contract. Further, farmers with relatively low TE, and typically limited access to disease control services, are shown to be more willing to participate in the DFZs. These insights should guide policies on beef cattle production and the design of DFZ programmes in Kenya and other countries that face similar challenges.