IMPACT OF PURCHASE FOR PROGRESS
(P4P) PROJECT ON FARM INCOMES IN
KENYA (CASE OF TRANSMARA AND
ELDORET EAST DISTRICTS )
PRESENTED BY JUDITH .M .MUTUKU
SUPERVISORS: DR. NZUMA
DR. IRUNGU
C M A A E T H E S E S D I S S E M I N AT I O N W O R K S H O P
PRESENTATION OUTLINE
Introduction
Problem Statement
Objectives
Hypotheses
Justification
Methodology
Results and Discussion
Conclusion and Policy Implications
INTRODUCTION
WFP assists about 90 million people per year food in
over 70 countries
Purchase for progress (P4P) is a programme
implemented by the WFP in 21 countries in parts of
Africa, Central America and Asia.
P4P is a 5 year pilot project implemented in Kenya in
2009 with an aim of moving smallholder farmer
groups from informal into structured trade.
In Kenya, targeted areas were Eastern, Rift valley
and western provinces.
INTRO….
 The P4P project in Kenya works closely with the
Ministry of Agriculture and partners such as CGA,
AGMARK,AMPATH, KACE, farmers and agrodealers.
 The partners assist farmers in meeting WFP quality
requirements and capacity building to participate in
market.
PROBLEM STATEMENT
 The P4P project has been in operation for three years
since 2009 with reported achievements and challenges.
 However, the impact of P4P project on farmer’s
income is largely unknown in Kenya thus the need for
reliable empirical evaluations that provide evidence on
its impacts
 It is also not known whether the P4P project has
increased agricultural production, improved postharvest handling and marketing choices.
PURPOSE AND OBJECTIVES
Overall Objective: To quantify the impact of WFP’s P4P
project on farm incomes among the smallholder farmers
in Uasin Gishu and Narok counties in Kenya.
Specific objectives:
Assess the differences in maize gross margins between
P4P participants and non-participants.
Evaluate the impact of the P4P project on maize gross
margins
Hypotheses Tested
There are no differences in the maize gross margins
between P4P participants and non-participants
Participating in P4P has no effect on maize gross
margins
METHODOLOGY
Economic theory; Random Utility Model theory(RUM)
First objective: Gross margin analysis
Grossmargin  TR  TVC ( PQ  TVC )
Where TR= revenue,
TVC=variable cost,
P=price of maize
Q = quantity of maize produced.
…
Second objective: PSM
First step; logit model;
Participation Eqn: = 1 and 0 otherwise)
= βo+ β1 AGE + β2 EDUC +
β3 GENDER + β4 CREDIT + β5 HHSIZE + β6 FARMSIZE + β7 MZPRICE + β8
EXTN + β9 DISTANCE + β10 FOMEMBER + β11 OCCUPATION + e (error term)
Second Step: PSM Matching Methods
Y * (Grossmargin)  a  bRi  cXi  ei
 Where a is a constant, b measures impact of P4P on mean
output, c is the average treatment effect, Ri - dummy
variable = 1 if farmer i participates in P4P project and 0
otherwise, Xi are propensity scores from the preceding logit
model and ei is the error term
RESULTS AND DISCUSSION
Attribute
Uasin Gishu county
Mean- P4P
(N=57)
Age (years)
HHsize
–
persons
Years
of
schooling
Farm
size
(acres)
Price of 90 kgbag of maize
(KShs)
Maize
yield
(90kg-bag
/
acre)
Gross margin/
Farm income:
Kshs/ha/year)
Distance to the
P4P
store
(Kms)
Narok county
Mean-NonP4P (N=69)
45
(1.58)
6
(0.32)
10
(0.457)
6
(1.44)
2946
(31.18)
47
(1.76)
6
(0.425)
9
(0.41)
5
(0.73)
2620
(34.02)
21
(0.31)
19
(0.49)
38994
(708.09)
16
(1.44)
t-test
Mean- P4P
(N=57)
Mean-NonP4P (N=69)
t-test
44
(1.48)
8
(0.433)
7
38
(1.16)
7
(0.445)
9
14
(3.88)
3125
(37.20)
22
(3.88)
3086
(54.53)
**
20
(1.82)
15
(0.58)
**
31627
(990.22)
***
34877
(716.05)
27624
(676.53)
***
10
(1.05)
**
11
(2.11)
12
(1.40)
***
**
**
***
RESULTS AND DISCUSSION
First Objective- Gross margin analysis
The difference in mean between the P4P participants
and non participants was statistically significant at 1
percent –reject null hypothesis.
Farm income (Ksh / acre/year)
Mean
Mean
t- statistics
difference
P4P farmers
36 954
7313.55
*8.886
Non P4P
29 640
farmers
DETERMINANTS OF PARTICIPATION
Maximum likelihood
Marginal effects
estimates
Variables
Coefficient
p-value Coefficient
p-value
Gender
0.005
0.179
0.023
**-0.990
Age
0.005
0.736
-0.002
0.667
Education
-0.007
0.866
0.003
0.728
Occupation
0.274
0.385
-0.582
0.404
Hldsize
0.068
0.224
-0.004
0.772
Farm size
Price
market
extension
*-0.016
***0.002
0.053
0.000
0.003
-0.000
0.066
0.000
0.021
0.133
-0.004
0.274
***1.887
0.000
-0.377
0.000
DISTRIBUTION OF PROPENSITY SCORES AND
AREA OF COMMON SUPPORT
P-value of the logit model = 0.000 model fits the data
well
0
.2
.4
Propensity Score
Untreated
.6
.8
Treated
1
IMPACT OF P4P PARTICIPATION ON FARMERS INCOME
Matching Sample Treated Control Differen Std
T stat
ce
error
Unmatc
hed
36953
29674
NNM
ATT
ATU
ATE
36953
29674
29674
36291
KBM
RM
7279
847
8.58
7245 1213.94
6616
6903.23
5.97**
ATT
ATU
ATE
36953.94 29793.36 7160.57 1035.43
29674.53 36581.70 6907.16
7022.63
6.92**
ATT
ATU
ATE
36953.94 29240.48 6974.14 1308.56
29694.53 36134.98 7037.95
7008.87
7.13**
CONCLUSIONS
P4P project has;
Increased participants incomes by 7245ksh/acre/year
(NNM)
Increased participants productivity by 3-90 kg bags/acre
Created a ready market for maize
Improved participants access to credit especially
through partnership with equity bank
Improved participants access to extension through its
partners like MoA, CGA etc
Improved collective marketing through FOs
POLICY IMPLICATIONS
 Need to encourage farmers to participate in P4P project
for better prices and assured market
 The government and other institutions that lend credit
should design better policies for credit packages that are
tailor-made for farmers-fair collateral
 The government should enhance extension services
through extension personnel to equip farmers with the
appropriate knowledge to improve farm productivity.
 Policies which encourage farmers to market collectively
should be enacted as well as timely payments to avoid
delayed payments
THANK YOU
GOD BLESS