Smallholder Avocado Contract Farming in Kenya: Determinants and Differentials in Outcomes

Avocado is a non-traditional export crop of economic importance in Kenya. Commercialization of the fruit through contract farming is a viable alternative for improving the welfare of majority of smallholder farmers involved in its production. This paper explores factors influencing the participation of smallholder farmers in avocado contract farming and decomposes those contributing to differentials in quality and quantities of fruit harvested and sold by contract and non-contract farmers. Findings from a probit analysis indicate that adoption of Hass and Fuerte varieties, hired labor, and information on production and marketing significantly influenced participation in contract farming. Results from gap analysis, using Oaxaca-Blinder decomposition, showed that differences between contract and non-contract farmers in quality and quantities of harvested and sold were due to endowment and structural differences. The results imply that closing the observed gap will require policies aimed at facilitating better access to land and training of farmers in good agricultural practices among other support services.