Factors Influencing Agribusiness Profitability: An Analysis of Smallholder Pig Farming in Kenya's Tharaka-Nithi County

Abstract

Aims: To increase the profitability of the pig subsector for farmers, particularly smallholder farmers, there have been concentrated efforts to commercialize it. Smallholder farmers have not consistently made money in the field, despite advancements. Profits for smallholder farmers have been inconsistent and disappointing. Since the impact of institutional arrangements from a transaction cost perspective and managerial factors contributing to this inconsistency have not been thoroughly determined, the reasons for the disparate profitability have not been experimentally established. The study looked at how management practices and institutional structures affected the profitability of smallholder pig farming in Kenya's Tharaka-Nithi County.
Research Methods: Eighty smallholder pig farmers were chosen using a two-stage sampling process. Data was analyzed using the stochastic frontier production function and descriptive statistics after semi-structured interview guides were used.
Findings: According to the study, the majority of male respondents (75%) were of working age, had six years of experience raising pigs, and had only a basic education. Findings from the stochastic frontier production, respondents' profit efficiency was negatively impacted by feed costs (p<0.01) and breed type (p<0.05), but positively by herd size (p<0.05) and veterinary and medication expenses (p<0.01). While information trust (p<0.05) and experience decreased inefficiency, gender (p<0.1) and the debt-to-asset ratio (p<0.01) increased it.
Conclusion: The research area's mean profit efficiency was 0.40, indicating low profit efficiency. By adopting current technologies, reducing transaction costs, and making better use of the resources already available, the efficiency level may be raised by 60%. Adopting effective management techniques and marketing avenues would result in this acquisition. The gamma parameter (γ) was 0.63, indicating that profit inefficiencies account for 63% of the variation in net revenue. The study advances the subject of agribusiness and would enhance Kenyan policies related to the growth of agribusiness.