FACTORS AFFECTING SUGAR CANE FARMERS

PROFITABILITY IN KENYA: A CASE OF MALAVA SUB

COUNTY IN KAKAMEGA COUNTY

BY

NOELINE MUSESHI MURUNGA

UNITED STATES INTERNATIONAL UNIVERSITY -

AFRICA

SPRING 2021
 FACTORS AFFECTING SUGAR CANE FARMERS
PROFITABILITY IN KENYA: A CASE OF MALAVA SUB
COUNTY IN KAKAMEGA COUNTY

By

NOELINE MUSESHI MURUNGA

A Research Project Report Submitted to the Chandaria School

of Business in Partial Fulfillment of the Requirement for the
Degree of Masters in Business Administration (MBA)

UNITED STATES INTERNATIONAL UNIVERSITY -

AFRICA

SPRING 2021
 STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any
other college, institution or university other than the United States International University
in Nairobi for academic credit.

Signed: ________________________ Date: _____________________

Noeline Museshi Murunga (Student: ID 660077)

This project has been presented for examination with my approval as the appointed
supervisor.

Signed: ________________________ Date: _________________

Timothy Okech, PhD

Signed: _______________________ Date: _________________

Signed: _______________________ Date: _________________

Dean, Chandaria School of Business

ii
 COPYRIGHT
©Copyright Noeline Museshi Murunga, 2021

All Rights Reserved

iii
 ABSTRACT
The purpose of this study was to assess the factors influencing sugarcane farmers’
profitability in Kenya, particularly in Malava Sub County in Kakamega County. This was
done with guidance of the following research questions: what is the effect of sugarcane
factory pricing on sugar cane farming profitability?; what is the effect of farm input
expenses on sugar cane profitability?; and what is the effect of farm size/scale of farming
(output/units produced) on sugar cane farming profitability?

The study adopted descriptive research design in studying the targeted population of 643
comprised of sugar cane farmers and agricultural extension officers in Malava Sub County
in Kakamega County. The study adopted stratified random sampling technique to select the
sample of size 247 respondents where 4 of them were agricultural extension officers and
243 farmers’ representatives. Data was collected using questionnaires that were piloted
before the collection process. Collected data was then analyzed both qualitatively and
quantitatively. Qualitative data was analyzed thematically while quantitative data was
analyzed by use of Statistical Package for Social Sciences (SPSS) and descriptive statistics
such as mean, standard deviations, frequencies and percentages were obtained. Inferential
statistics such as regression analysis were also carried out to examine the relationship
between the independent and dependent variable.

The findings revealed that most of the farmers were not satisfied with the millers’ prices as
it had a significant impact on the profitability of sugarcane farming. The prices provided
by the millers were not adequate to cover costs of production including transportation of
sugarcane to collection points or to the millers. The prices had less consideration on market
demand in the sense that, even when the sugar prices increase the millers rarely revised
their cane buying prices upwards. In the process of price adjustments by millers, farmers’
representatives are neither informed nor consulted before any adjustments are initiated. On
stability of the prices, prices keep on fluctuating in favor the millers. Most of the farmers
acknowledged that the extent to which millers’ prices had negatively impacted on their
profitability was very great.

It was also established that the effect of fertilizer cost on profitability was generally high.
The effect of seedling costs, ploughing and land preparation costs, labour cost during
planting, weeding and harvesting, the cost of transportation to millers, the cost of
purchasing farm equipment and the costs of pesticides and herbicides on profitability was

iv
generally moderate. The effect of watering and security services costs on profitability of
sugarcane farming was generally low.

Finally, the study established that most farmers acknowledged that farm size has a
significant impact on the profitability of sugarcane farming. The extent to which the farm
size can impact on profitability of sugarcane farming was very great. Chi-Square test
established that there was significant effect of farm size on the profitability of sugarcane
farming. Most farmers believed that when they increase their farm size it will lead to
significant increase in profits due to more sales as a result of more produce hence boosting
the profitability of their sugar cane farming.

In conclusion, there is significant effect of millers’ prices on the profitability of sugarcane

farming. Most of the farmers were not satisfied with the millers’ prices and regarded them
as unfair. The effect of each farm input cost had different effect on its profitability. The
effect of fertilizer cost was high while of seedling costs, ploughing and land preparation
costs, labour cost during planting, weeding and harvesting, the cost of transportation to
millers, the cost of purchasing farm equipment and the costs of pesticides and herbicides
was generally moderate and watering and security services costs was low. There is a
significant effect of farm size on the profitability of sugarcane farming.

The study therefore recommended that government bodies mandated to control sugarcane
prices should be empowered so that they can be able to protect farmers form millers who
are out to exploit them by initiating tough penalties like operational license withdrawal or
suspension on millers who go against the recommended prices. The national government
should offer farmers fertilizers at subsidized cost since they greatly affect their profitability.
Lastly, farmers are advised to not only focus on increasing their farm size but rather focus
on improvement of their production skills.

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 DEDICATION
I dedicate this project to my family including my mother Rhodah Kwalanda, siblings Allan
and Dorine Murunga and grandparents Elly and Speta Shisambula, for their continued
support during my study and in preparation of this project.

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 ACKNOWLEDGEMENT
I acknowledge the presence of God the Almighty in my life. For the wisdom and strength,
He accorded me to have been able to prepare for the execution of this project.

I am truly grateful to my supervisor Prof Okech, for the timely response, listening ear that
he accorded me all through the execution of this research project. I could not have asked
for any other. I appreciate his guidance and support.

I would also like to recognize and thank my Dearest family, friends and MBA (Strategic
Management) members and supervisors for their understanding, resource input, endless
love and encouragement throughout the Research Project execution to the end.

Not to forget the sugarcane farmers and agricultural extension officers I interacted with in
Malava Sub County (Kakamega County) for without their corporation towards the
completion of this project would not have been possible.

Last but not least my friends and family for assisting in the questionnaire execution at the
pretest and actual research data collection time. Not to forget my data entry and analysis
team. Thank you once again.

May God bless you All.

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 TABLE OF CONTENTS

STUDENT’S DECLARATION ....................................................................................... ii

COPYRIGHT ................................................................................................................... iii
ABSTRACT ...................................................................................................................... iv
DEDICATION.................................................................................................................. vi
ACKNOWLEDGEMENT .............................................................................................. vii
LIST OF TABLES ............................................................................................................ x
LIST OF FIGURES ......................................................................................................... xi
CHAPTER ONE ............................................................................................................... 1
1.0 INTRODUCTION....................................................................................................... 1
1.1 Background of the Problem ..................................................................................... 1
1.2 Statement of the Problem ......................................................................................... 7
1.3 Purpose of the Study ................................................................................................ 8
1.4 Research Questions .................................................................................................. 8
1.5 Importance of the Study ........................................................................................... 8
1.6 Scope of the Study ................................................................................................... 9
1.7 Definition of Terms.................................................................................................. 9
1.8 Chapter Summary .................................................................................................. 10
CHAPTER TWO ............................................................................................................ 11
2.0 LITERATURE REVIEW ........................................................................................ 11
2.1 Introduction ............................................................................................................ 11
2.2 Sugarcane Factory Pricing and Sugar Cane Farming Profitability ........................ 11
2.3 Effect of Farm Input Expenses on Sugar Cane Profitability.................................. 18
2.4 Effect of Farm Size/Scale of Farming on Sugar Cane Farming Profitability ........ 24
2.5 Chapter Summary .................................................................................................. 28
CHAPTER THREE ........................................................................................................ 30
3.0 RESEARCH METHODOLOGY ............................................................................ 30
3.1 Introduction ............................................................................................................ 30
3.2 Research Design..................................................................................................... 30
3.3 Population and Sampling Design ........................................................................... 30
3.4 Data Collection Methods ....................................................................................... 33
3.5 Research Procedures .............................................................................................. 33
3.6 Data Analysis Methods .......................................................................................... 35

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 3.7 Chapter Summary .................................................................................................. 36
CHAPTER FOUR ........................................................................................................... 37
4.0 RESULTS AND FINDINGS .................................................................................... 37
4.1 Introduction ............................................................................................................ 37
4.2 General Information ............................................................................................... 37
4.3 Sugarcane Factory Pricing and Profitability of Sugarcane Framing ..................... 41
4.4 Farm Input Costs and Profitability of Sugarcane Framing .................................... 47
4.5 Farm Size and Profitability of Sugarcane Framing................................................ 52
4.6 Chapter Summary .................................................................................................. 60
CHAPTER FIVE ............................................................................................................ 61
5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ....................... 61
5.1 Introduction ............................................................................................................ 61
5.2 Summary of the Study ........................................................................................... 61
5.3 Discussion .............................................................................................................. 63
5.4 Conclusion ............................................................................................................. 69
5.5 Recommendations .................................................................................................. 70
REFERENCES ................................................................................................................ 72
APENDICES ................................................................................................................... 79
Appendix1: Questionnaire for Farmers ....................................................................... 79
Appendix 2: Questionnaire for Agricultural Extension Officers ................................. 85
Appendix 3: Rating Scale ............................................................................................ 87
Appendix 4: Sugar Cane Producing Countries ............................................................ 88
Appendix 5: NACOSTI Letter ..................................................................................... 89

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 LIST OF TABLES
Table 3.1: Population Distribution.....................................................................................31
Table 3.2: Sample Size Distribution...................................................................................33
Table 3.3: Reliability Analysis…………………………………………………………...36
Table 4.1: Response Rate…………………………………………………………….......37
Table 4.2: Millers’ Prices effect on Profitability of Sugarcane Farming…………...……42
Table 4.3: Millers’ Sugarcane Prices…………………………………………….….……44
Table 4.4: Regression Model Summary (Sugarcane Factory Pricing)...............................45
Table 4.5: ANOVA (Sugarcane Factory Pricing)..............................................................45
Table 4.6: Coefficients of Regression Equation (Sugarcane Factory Pricing)...................46
Table 4.7: Costs of Farm Inputs…………………………………………………….……48
Table 4.8: Effects of Input Costs on Profitability of Sugarcane Farming…………….....49
Table 4.9: Regression Model Summary (Farm Input Cost) ..............................................50
Table 4.10: ANOVA (Farm Input Cost)............................................................................51
Table 4.11: Coefficients of Regression Equation (Farm Input Cost).................................51
Table 4.12: Farmers’ Yield…………………………………………………………….....54
Table 4.13: Farm Size effect on Profitability of Sugarcane Farming………...……….….56
Table 4.14: Regression Model Summary (Farm Size) ......................................................59
Table 4.15: ANOVA (Farm Size)......................................................................................59
Table 4.16: Coefficients of Regression Equation (Farm Size)...........................................59

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 LIST OF FIGURES
Figure 4.1: Gender of the Respondents ………………………………………………....37
Figure 4.2: Highest Academic Qualification of the Respondents………………….……38
Figure 4.3: Age of the Respondent………………………………………………………38
Figure 4.4: Years of Experience in Sugarcane Farming…………………….………...….39
Figure 4.5: Other Sources of Income……………………………………………….……40
Figure 4.6: Satisfaction with Sugarcane Pricing by Millers………………..…………….40
Figure 4.7: Extent to which Pricing has positively impacted on Profitability……...……41
Figure 4.8: Extent to which Pricing has negatively impacted on Profitability…………..42
Figure 4.9: Millers’ Price per Tonne…………………………………………………..…43
Figure 4.10: Estimated Cost of Production per Acre…………………………………….43
Figure 4.11: Farm size under sugarcane farming…………………………………….......52
Figure 4.12: Standard Produce of Sugarcane per Acre (Tonne)…………………………53
Figure 4.13: Farmers’ Production per Acre (Tonne)…………………………………..…54
Figure 4.14: Farm Size impact on Profitability………………………………………......55
Figure 4.15: Extent to which Farm Size impacts on Profitability……………………..…56
Figure 4.16: Farmers’ Satisfaction with Farm size under Sugarcane Cultivation……….57
Figure 4.17: Intention to increase Farm Size…………………………………………….58
Figure 4.18: Farm Size increment and Profitability……………………………………...58

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 CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Problem
Profit can be defined as the difference between revenue obtained against cost incurred
during the undertaking of an activity. On the other hand, profitability refers to the ability to
earn from an investment (Tulsian, 2014). The terms profitability and profits are used
synonymously but there is difference between the two (Chakraborty, 2001). While the term
profit is employed in an absolute sense, it’s worth noting that the term profitability has a
relative nature. It is noted that to the financial managers’, profit is defined as the test
concerning efficiency as well as a measure of control, to the creditors the margin of safety
while the owners use it to measure the worth of their investment. The government measures
taxable capacity by use of profit which is also referred to the basis of legislative action.
Profit simply refers to an index regarding economic progress, the national income being
generated including the upsurge in the country’s standards of living, while profitability is
an outcome of profit. Conversely, profitability is not determined by profit. Profitability of
a firm may vary even when these firms have similar profits (Nishanthini & Nimalathasan,
2013).

Profitability is one of the main goals of different economic activities including, cash crop
farming. Farmers practice cash crop farming with a goal of creating profits from their crops
in order to improve their economic welfare (Kanyua, Waluse & Wairimu, 2015). According
to Habib, et al. (2014) making farming a proficient, productive and profitable sector results
to improved life quality of a people. From the proceeds obtained from farming, most
successful farmers have been able to improve their quality of life through acquiring better
medical services, better housing, and quality education for their children among others.
They have also been able to offer employment to other surrounding community members
who have also been able to earn a relatively decent living by providing basic needs such as
food, shelter and clothing for their family proceeds earned by offering casual labor.

Sugarcane farming is common across the world; the economic well-being of Brazil for
instance, heavily depended on sugarcane during its early colonial time for its economic
well-being. With sugarcane production mainly being highly full-blown in the eight states
of Brazil namely: Sao Paulo, Grosso do Sul, Minas Gerais, Alagoas, Mato Grosso,
Pernambuco, Goias, Mato, and Parana has made Brazil lead the world in sugarcane

1
production. These eight states are accountable for the 90% of the entire sugarcane
production in the country. Looking at the harvesting analysis in 2007, 558 million tons of
sugarcane was harvested by Brazil, which had a representation progress of 17.62% in
comparison to 2006. Regarding 2008, Brazil harvested about 648,921,280 tons of
sugarcane, where 89% or 540 million tons was utilized for sugar as well as ethanol
production. Due to high levels of production and profitability of sugarcane farming, it has
placed Brazil at the top of the world map when it comes to production and exporting of
sugar across the world. This has improved on the livelihood of its citizens though revenues
earned from engaging in sugarcane farming directly or offering labor to millers (Harb
&Columba, 2010).

In USA, sugarcane is mainly grown in Florida (Baucum &Rice, 2008). In 2007-08, a

statistic of 48% showcased that cane sugar produced in the USA is produced in Florida.
Globally labor costs in Florida are extremely expensive irrespective of the sugar mills being
modern and efficient. In the 1990s high labor expenses as well as other economic
components resulted to the rapid conversion of industry to mechanical harvesting which
led to the ultimate reduction in the number of sugar mills. Baucum and Rice (2008)
established that some cane, particularly young growth from newly planted cane are
damaged by sporadic sub-freezing to some temperature conditions which occurs nearly
every winter resulting to great losses hence heavily impacting on the profitability of the
venture.

In Bangladesh, Kamruzzaman & Hasanuzzaman (2007) researched primarily on the

determinants influencing the profitability concerning production of sugarcane in the
country. The study findings showcased that factors such as cost of urea, family labor cost,
cost of seed cane, and the frequency of fertilizer applications, were very essential
determinants in affecting the profitability of sugarcane production. Harb and Columba
(2010) also conducted a research on the factors affecting productivity of sugarcane farming
and recognized fertilizer, soil sampling, weed control, re-planting with treated seed cane,
as well as the application usage of herbicides as crucial role to producing above-average
sugarcane yields. Harb & Columba (2010) similarly spelled out more priority urges that the
harvesting operation influences farm profitability significantly.

2
Masuku (2011) during his investigation of profitability determinant’s particularly for the
smallholder sugarcane growers in Swaziland (Eswatini) he found that, the farmer’s
experience, yield per hectares, sucrose content in the sugarcane, the transition in the
production quota of the farmers as well as the distance between both the farm and the mill
affected the profitability of sugar cane farmers. Mandla & Masuku (2012), in Swaziland
conclusively proved that sugarcane profitability is based on engaging in exceptional
husbandry practices consisting of the cane crop, engaging in a timely weeding, use of
fertilization methods and irrigation. The two authors came into conclusion that critical
factors such as costs of inputs involving labor and fertilizers, the farm size, and having
experience in farming determines the profit in sugarcane farming. In addition, Mbuyazwe
& Barnabas (2012) deduced that distance regarding both the farm to the mill as well as the
fertilizer application techniques as components that influence the production of sugarcane,
thus profitability of the cane to the farmers of Swaziland.

A study done by Girei and Giroh (2012) on sugarcane farming in Nigeria noted that the
farmer’s experience various challenges in sugarcane farming, they recommended that there
should exist provisions of agro-inputs or even the mechanical services in a timely manner
to the farmers and also utilize sufficient irrigation water with an aim of enhancing farmers’
operation contributing to much higher profits. An effective system must be granted priority
by putting it in place where farmers should be connected with community money lenders
and the service providers. Girei and Giroh (2012) suggested that to precisely meet the
processing company’s demand having considerations of high-quality cane supply and to
come up with enough funds for the out-grower farmers, the concern of low cane production
should be looked into by embracing the provision of high yielding, disease resistant,
productive as well as pest and disease-free farms by enlargement of the estate farms. Girei
and Giroh (2012) believed that if all recommendations were to be implemented, then the
level of production in terms of both quality and quantity will increase hence positively and
significantly impacting on its profitability

The top 10 nations producing sugarcane worldwide in 2013 were India, Brazil, China,
Thailand, Mexico, Pakistan, Colombia, Philippines, Indonesia, and USA while closer
analysis highlighted that their cane productions (million Mg of cane) accounted for the
estimated figures comprising: 34.1, 15.8, 5.8, 4.6, 2.9, 2.8, 1.6, 1.6, 1.5, and 1.3% (a total
of 72%) of the world overall cane production, respectively (Appendix 4). Cane yields (Mg

3
ha−1) in regards to these countries ranked 29th, 40th, 39th, 26th, 51st, 25th, 19th, 31st,
37th, and 27th, correlatively, in the 103 countries producing the sugarcane.

In tracing of the last 41 years, production of sugarcane was earlier raised with years
ranging from 1973 to 2013 in the entire top-ranked seven countries involved in sugarcane
production. Determinants such as cane yield and sugarcane area resulted to cane
production increases, yet it’s worth noting that the increased area was amore superior
contributor in comparison to cane yield in exception for the country, Pakistan, where the
upsurges in sugarcane hectarage as well as in cane yield had same relative amount.
Hectarage in Brazil, India, China, Thailand, Pakistan, Mexico, and Colombia increased by
500, 94, 237, 286, 57, 52, and 61%, respectively, and cane yields increased by 60, 38, 59,
70, 58, 11, and 24%, respectively, in last 41 years (1973–2013) based on linear regression.
Looking at similar period regarding years, sugarcane hectarage in USA only had increased
by 31% and yield had no huge alteration or kind of declined (7.0%) (Duli &Yang, 2015).

In addition, cane yield was noticed to be lower while on the other hand, the yield variation
(CV) across years was observed to be greater in a number of the developing nations in
comparison to that in USA. Averaged across 41 years from 1973 to 2013, mean cane yields
in Brazil, India, China, Thailand, and Pakistan were 17.8, 21.0, 25.1, 31.7, and 44.1%
lower, respectively, as compared to that in USA (Appendix 4). Coefficient of variation
(CV) values for cane yields across years in these five nations ranged from 11.5 to 20.4%
compared to a CV value of 5.7% in USA. When plotting sugarcane hectarage and yield
against year, neither hectarage nor yield in the top five sugarcane production nations had
leveled off while the slope (indicating cane yield increasing rate) of the linear regression in
appendix 4 ranged from 0.49 (India) to 0.75 (Brazil) Mg ha−1 yr−1. Even though the
influence of climate change on production of sugarcane relies on geographic location as
well as on adaptation degree, while cane yields in a number of the developing nations yet
likely to rise by means of advanced cultivars and management practices. Thus, increments
in either sugar-cane area or even cane yield are however feasible in these nations in
contemporary environment. Measures such consideration of raising population and land
disadvantage, progressing on sugarcane yields as a future prospect is highly significant in
comparison to hectarage for production of sugar primarily in a good number of developing
countries (Duli &Yang, 2015).

4
Agriculture is known as the major backbone of the Kenyan economy. It openly offers a
contribution of 26% of the GDP and also a contribution of 60% of the country’s export
earnings. Also, the agricultural sector contributes indirectly to an additional 27% to the
Gross Domestic Product (GDP) by the connections with the manufacturing, distribution
and considerations of the other related service sectors (Sserunkuma, 2005). Mostly,
sugarcane is usually grown in western parts of Kenya, which further largely consists of the
minimal income earners (KNBS, 2005). According to Sserunkuma (2005), highlights that
the Kenya’s out grower’s scheme are part of a production structure of the sector. The out-
grower schemes engage in undertaking the bulk of the production exercises, and therefore
play a pivotal function in the outlining process and production of sugarcane. Regardless of
the policy reforms undertaken into consideration in the current years, especially with an
intention concerning the liberalization of the agricultural sector which are under the
government control, has marked a decrease in crop productivity (Marinda, 2006). The sugar
sub-sector just like any other existing industry is faced by several challenges. According to
Kenya Sugar Board (2015), the challenges which are hindering the accomplishment of
Kenyan sugar industry are as a result of high cost of cane production witnessed in the
country in comparison to the other sugar producing nations in the region, lack of success
of the specific stakeholders to upgrade the milling factories to meet the demands of the
new technology, problems of underfunding, insufficient research and extension services to
enable sufficient to the industry as well as the challenges regarding the Kenyan sugar
industry as a result of the liberalization of trade which is particularly under the COMESA
protocols.

The level of productivity is a notable area of a concerning matter in the sugar industry as it
plays a salient role of determining the profitability level, uniquely involving both the sugar
mills and the out growers (they are primarily the smallholder farmers). A number of studies
have been carried out to set up the profit factors in the sugar industry. Mandla and Masuku
(2012) established that excellent husbandry practices concerning the cane crop, for
instance, engaging in a timely weeding, fertilization practices and irrigation increases
profitability of sugar. They draw conclusions factors such as the farm size, costs of inputs
such as labor and use of fertilizer and good farming experience determines profit in
sugarcane farming. According to Fuchaka et al. (2012), who were involved in the studying
of relationship between poverty, contract sugarcane farming, and environmental
management in the Kenyan Lake Victoria basin, conclusively proved that the disparities in

5
income distribution between the sugar companies and the farmers was linked factor such
managerial, ethical and political components. The observation drawn here was that reduce
net income was caused as result of a company-driven deductions that the farmers couldn’t
take control of. According to Dlamini (2011) there exists a large number of determinants
that recognize the profitability of sugarcane. The author also echoed that management
aspects; for instance, labor should be observed intently in as far as activities such as
weeding, planting, fertilizer application, irrigation, and harvesting aimed at improving the
profitability. Over-utilizing or even under-utilizing labor influences the entire sugarcane
profitability. In line the similar breath, agronomic determinants like the soil fertility, system
of irrigation, varieties planted, and timely planting identifies the profits level to be realized
in a sugarcane venture. Although a number of study findings have researched the rationale
leading to the drop in sugarcane production, the need for engaging in further research
remains. This pre requisite is due to the fact that sugarcane production is yet on the
recession, leading in lesser growers. It is contrary to this background that the researcher
seeks to examine the profitability of sugar cane farming in Malava Sub County.

The size and scale sugar industries differ among different nations as sugarcane growing is
done on the basis of large estates or even by both smallholders and subsistence farmers.
Large estates (nucleus) commonly involved in production of the bulk of sugarcane yet
smallholders are partly responsible for quite extensively in a few countries. In Mauritius
for example30% of sugarcane supply is produced by approximately 26,000 smallholders
while engaging comparison looking at South Africa, 12% is produced by roughly 45,000
small holder farmers as the rest of the supply are being produced by 1,729 large scale
growers (Vermeulen, 2011). Inconsideration of the Kenyan case-scenario, there are around
250,000 small scale farmers who are involved in the supply estimate of 92% of sugarcane
to the sugar millers, whereas the rest is provided by factory-owned nucleus estates (KSI,
2009).

Masuku (2011) notes that profitability regarding cane farming is recognized by the
following; yield per hectare, the farmer’s experience in farming, sucrose content found in
the sugarcane as well as the distance between both the farm and the mill. Limited capital,
low technical capabilities, and the produce sugarcane under rain-fed settings characterize
the sugarcane growing conditions in Kenya. Land fragmentation was recognized as

6
similarly being a challenge of concern affecting a number of out growers. Lands which are
owned by respective out growers continues to be sub-divided into even minor parcels,
weakening the productivity of nearly entire farming tasks (KSI, 2009).

1.2 Statement of the Problem

Bearing in mind the fact that sugar sub-sector in Kenya provides nearly 15% of the
agricultural GDP making it a key contributor to the economy, the productivity of the sector
in the country has been hindered by a varied number of challenges ranging from inadequate
funding, high costs of production, poor factory conditions and trade liberalization. The out-
grower schemes in Kenya, which forms the major part of a production structure of the
sector through cultivation of sugarcane on behalf of the millers has been on the decline.
Most of the out growers still do not lead a decent life regardless of their service to the
millers (Sserunkuma, 2005). Although the sugar industry is majorly backed by the
smallholder farmers (out growers) supplying approximately 92% of the sugar milled
countrywide (KSB, 2015), regions which sugar cane out growing schemes are still
practiced, like in western Kenya, are similarly predominantly comprised of low income
earners in the agricultural sector which raises a question on the profitability of the venture
(KNBS, 2005).

Although policy reforms that have been undertaken primarily aimed at the liberalization of
the agricultural sector from government control, there has been a marked decline in crop
productivity (Marinda, 2006). Findings show that, those regions which were well known
for the production of sugarcane like the western regions of Kenya, most farmers have
shifted their attention to other crops like maize, beans and other cash crops raising eyebrows
on the profitability of the sugar sector (Marinda, 2006). It is against the decline of out
growers that the researcher seeks to examine the profitability of sugarcane farmers in
Malava Sub County. Various researchers have conducted studies on profitability of
sugarcane farming and have established a link between profitability of sugarcane farming
various factors (Masuku, 2011; Dlamini, 2011; Marinda, 2006; Duli &Yang, 2015;
Mbuyazwe & Barnabas, 2012). However, none of the similar studies have been done in
the western regions of Kenya which has been predominantly a sugarcane production region.
This study therefore sought to fill this gap by assessing the profitability of sugar cane
farming in Malava Sub County in the western regions of Kenya.

7
1.3 Purpose of the Study
The purpose of the study was to assess the factors affecting profitability of sugar cane
farming among sugarcane farmers in Malava Sub County in Kakamega County.

1.4 Research Questions

1.4.1 What is the effect of sugarcane factory pricing on sugar cane farming profitability
among sugar cane farmers in Malava Sub County?

1.4.2 What is the effect of farm input costs on sugar cane profitability among sugar cane
farmers in Malava Sub County?

1.4.3 What is the effect of farm size/scale of farming (output/units produced) on sugar
cane farming profitability among sugar cane farmers in Malava Sub County?

1.5 Justification of the Study

1.5.1 Government

The Kenyan government will use this information in making policies to safeguard the
interests of smallholder farmers. The findings will guide the policy makers on developing
policies that will protect both the sugarcane farmers and the millers and avert scenarios
where one party takes advantage of the other.

1.5.2 Energy Sector

High demand for electricity and fuel in most African countries, Kenya included has led to
the advancement of the energy sector. Addressing he challenges facing the sugar industry
are addressed will lead to an increased production of sugar will minimize the deficit caused
by high consumption of sugar which does not match the production capacity of the by-
products obtained from sugarcane may be employed for the purposes of electricity and
ethanol generation (Clainos et al. 2011).

1.5.3 Sugar Board

Findings from the research will be used by the Kenya Sugar Board to formulate policies
that will enable industry competitiveness in the region.

8
1.5.4 Farmers

Information from this study will be used by farmers to identify measures they can undertake
in order to maximize returns from the cane growing industry. The farmers will also be able
to put in place mechanisms to ensure increased profitability by information obtained from
this study.

1.6 Scope of the Study

This study was confined to the farmers in Malava Sub County of Kakamega North sugar
zone. Within this Sub County, the researcher focused on the 5 Sub-locations where farmers
are contracted to supply sugarcane to Butali Sugar Company. Within these Sub- locations,
there are a total of 1230 farmers. A representative of the farmers' were identified and
requested to give information as directed by research assistants who assisted them in filling
of the questionnaires. Agriculture extension officers, especially the field staff were also
interviewed. This study was done between January and April 2021.

1.7 Definition of Terms

1.7.1 Trade Liberalization

Trade liberalization is the removal or cutback involving both tariff and non-tariff obstacles
in the flow of goods and services across the countries or economies borders. Tariff barriers
comprise of both duties and surcharges while non-tariff barriers comprise both quotas and
licensing rules (Holscher, 2015).

1.7.2 Gross Domestic Product

Gross domestic product (GDP) refers to the value of all the finished goods and services that
are being produced by the country’s economy minus the cost incurred in producing the
goods and services (BEA, 2015).

1.7.3 Value Chain

A value chain is the processes which a product or service undergoes to bring to the final
disposable stage (Kaplinsky,2000). The stages are conception, the phases of intermediary
production, delivery services to the final consumers, and the final disposal after utilization.

9
1.8 Chapter Summary
The chapter presented an introduction to the study by evaluating the overall profitability by
sugar cane farmers of Malava Sub County in Kakamega County. The chapter included a
synopsis of such factors as factory pricing, farm input expenses and scale of farming in
evaluating the general profitability by the sugar cane growers. In the scope of study, the
total population for the study was found to be the 1,230 farmers in 5 sub-locations of
Malava North Sugar belt in Kakamega County. Out of this, a sample of 380 farmers is to
be taken as the sample size for the study.

Chapter two introduces the literature review which relates to the topic of research. This is
followed by chapter three, which describes the methods and procedure via which the study
was carried out then chapter four which presents the findings of the study and finally
chapter five which presents the summary of the findings, the discussion, conclusion and
recommendations of the study.

10
 CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction
This chapter looks at several research papers and studies by a variety of scholars basing
primarily on the subject of study. The literature review expounds on the research questions
formulated in chapter one, including; What is the effect of sugarcane factory pricing on
sugar cane farming profitability? What is the effect of farm input expenses on sugar cane
farming profitability? What is the effect of farm size/scale of farming (output/units
produced) on sugar cane farming profitability?

2.2 Sugarcane Factory Pricing and Sugar Cane Farming Profitability

Pricing is one of the leading factors that affect the profitability of a business venture. It is
noted that with 1 percentage increase in pricing profits will improve by 11 percent. A
business venture that seeks to double their profits would only have to increase their prices
by about 9 percent (Kohli& Suri, 2011). A product or service price has a parallel
relationship with the activities of the setting body. The price thereon affects the demand of
the product ad even general profitability of the suppliers of the product. Kottler and Keller
(2006) illustrates that the decision of the firm price mechanism is determined by the profits
it wants to make.

Thus, it should cover all the costs incurred and also be able to make a profit. Hilton (1991)
observed that the demand and supply factors all have a bearing on the cost of production
that then affects the pricing of a particular product or service. The key objectives of all
sugar cane pricing policies are setting of fair pricing to sugar cane growers, ensuring
adequate returns to the industry and lastly ensuring supply of sugar to consumers at fair
prices (Sawhney, 2016). The prices of sugar cane set, also affect several different factors
in the supply and production chain such as the costs of production and distribution.

In Kenya, for example, there are a sizeable figure of sugar producers whom in the absence
of any evidence of coordinated conduct there would be a downwards pricing trend.
However, the continuous high pricing is primarily due to ineffective production, powerful
security against imports, uncertain and inadequate sugarcane supply, as well as the
structural constraints to productivity development.

11
2.2.1 Sugar Prices and Sugarcane Factory Pricing

The rise in usage of sugar for domestic purposes, industrial and the food service sub-sectors
has seen a soaring consumption of sugar in the country thus, increasing demand of sugar
hence increasing the prices of sugar. However, this is not the sole reason for the high prices
of sugar as it was reported that high prices of Sugar could be partly attributed to the
controversy surrounding importation of unprocessed duty-free sugar, closure of a couple of
factories due to financial difficulties and scarcity of raw materials (Jackline, 2018).

Maurice (2019) found that sugarcane farmers across the country want sugar companies to
pay them more following an increase in the price of sugar when sugar is retailing at high
prices, it means millers are making profits and suppliers of the raw material should equally
benefit. Nyaga and Muema (2017) undertook a study to examine the effects of pricing
strategies on profitability. The study was done in the insurance industry in Kenya and
adopted a descriptive research design. Nyaga and Muema (2017) mainly examined how the
economy, skimming, penetration and premium pricing strategies affect profitability.
According to their findings the insurance firm profitability was significantly determined by
the pricing strategies of the firms including economy, skimming, penetration and premium
pricing strategies. They recommended establishment of measures to help in assessing the
remarkable efficient pricing strategy that would curb the product costs hence increasing
profitability at any time a pricing strategy is employed.

2.2.2 Committee Mandated with Sugarcane Factory Pricing.

In Kenya, sugarcane factory pricing is usually set by a committee, The Sugar Pricing
Committee (National Cane Pricing Committee), which has the sole mandate of determining
sugarcane prices. Prices which are often paid to sugarcane out growers are always decided
upon each and every time by the Cane Pricing Committee, consisting of members
representing cane growers’ associations like KSB, KESGA and millers’ associations like
the KESMA representatives. According to KSB (2009), the established Sugar Act of 2001
demands that sugarcane price will be determined on a basis of sucrose as a substitute of
weight.

This employed pricing system is aimed at encouraging farmers to hand over sugarcane with
high levels of sucrose, thus enabling millers to also have higher sugar recovery ratio during
processing. This results to increasing entire productivity of the industry (KSI, 2009). The
12
price should ideal be set and be reviewed based on the current market forces. The price of
sugarcane is usually heavily dependent on the current market price of sugar in Kenya, as
cane is the major source of raw material for sugar in Kenya. Currently, the prices of
domestic sugar are overhead the international price for sugar and indication of price
inflation. This is mainly as a result of both tariffs and quotas that are enforced on the
imported raw sugar. Sugarcane factory pricing is highly affected by sugar prices in Kenya
which is usually affected and manipulated by other players in the sector who use underhand
methods corruption and cartels to enrich themselves.

Another main thing is that some factories ignore the set pricing by the sugar committee and
thus set their own prices. The above factors generally affect the pricing of sugarcane and
thus the general bottom-line or rather profitability of the farmers. The cost of raw materials
for instance, processing costs, sugarcane, agricultural overheads as well as margins which
are the major causes of the ex-factory price of sugar. The ex-factory price might be
conducted or either may be put in place by the millers themselves. Looking at case analysis
of Zambia, South Africa, and Tanzania, the price-tag is put into place by the millers whereas
at the same time in Kenya the KSB pricing committee is involved in working out the ex-
factory sugar prices including making of recommendations to millers. The price
recommendations however are not usually realistic the millers do not adhere to them at all
(KSI, 2009).

2.2.3 Corruption and Cartels.

Cartels main motive is to raise price so that they can benefit from increased profit margins.
The cartel, by limiting competition, becomes successful in changing the path of sugar
prices. From the early 1990s to date, there has been overall rise in imports of sugar to the
country as well as a non-sequenced government trade liberalization policy rendering the
sugar cane subsector to be in crisis. Cartel operation in the sector and the belief that of
cheap imported sugar is cheap as compared to high-priced sugar in the Kenyan market has
also contributed to the crisis. According to Victor (2020) sugar millers and cane growers
heightened concern over an effort to build an artificial shortfall of Sugar to benefit cartels
in the industry.

The Kenyan regulating authorities use quotas and tariffs to regulate sugar imports into the
country. However, the authorities sometimes administer the quotas inappropriately,

13
combined with the hiked local retail prices, the importer “syndicates” acquire very high
profits sometimes twice higher than what local producers make (MCI, 2008). It is alleged
that the dealers shortly create artificial shortage of sugar and hike prices to create the need
for importation, citing that it would stabilize the prevailing retail prices. The millers
however, see this as a ridicule as they were selling at lower prices and this would push the
cane prices even lower to allow millers considerable profit margins. The uncontrolled
importation will finally affect the sugarcane famers as the cane prices are directly controlled
by the factory retail prices.

The government does not put emphasis on ensuring sanity prevails by monitoring and
inhibiting fraudulent import practices. There is also less monitoring done through The
Agriculture and Food Authority as this should ensure regulation of imports are in place and
issuing of new licenses for importation instantly stopped. Allowing further importation of
sugar will only bring the sugar industry to its knees as the state-owned sugar mills are
insufficiently operating because of inadequate funding and mismanagements while the
private mills are struggling to remain afloat in the industry. Ideally, the industries are
finding it difficult to operate with very high production costs and lower prevailing market
prices set by cheap sugar imports.

2.2.4 Factories Undercutting Committee by setting their own prices Availability and
Scarcity of Raw Material and Factory Pricing.

In Kenya, a couple of factories usually ignore the set price by the Sugar pricing committee
and set their own price. According to Jackline (2018), representatives of the growers from
Busia, Siaya, Bungoma and Kakamega wanted Sugar Directorate to crack the whip on sugar
factories that had revised cane prices downwards. They said it was wrong for millers to
assume powers of Cane Pricing Committee, which is the body solely mandated to
determine prices. It was also reported by Ruth, (2019) that farmers accused the Transmara
Sugar Company of reducing their pay while farm inputs, transport and gate cutting charges
remain high one farmer added that; The Kenya National Federation of Sugarcane Farmers
questioned why is it that farmers have to be the losers all the time.

In regard to the law of supply and demand if the supply of sugarcane is low the pricing
should be high as the farmers would tend to go sell to the millers who offer the best price.
14
And when there is oversupply of sugarcane then inherently the pricing of cane should be
lower as millers would have a large supplier’s base. If the farmers are also paid better for
their cane, they will tend to invest more on sugarcane farming hence increase the
productivity and area of farming hence guarantying millers with steady raw material
supply. From this, it is inherently that the factory pricing will be higher when the supply is
lower. Consumers then pay more while suppliers which are the sugar cane farmers suffer
as the factories focus on increasing their returns, attracting more consumers and in the
event, suppliers bear the burden (Ruth, 2019).

2.2.5 Monopoly by Sugar millers

Inconsideration of the entire sites, farmers traced sunken earnings to company-related

components, for instance, too many deductions from the gross income by the business firm
Waswa et al (2012). Various management regimes as well as the inclusion of culture
regarding the farming societies in the three areas assessed are some of the factors that
farmers attribute to be the cause of their problems. For example, Mumias Sugar Company
tends to have accomplished some proper investment in the sectors of infrastructure around
Lurambi and Koyonzo, in comparison to Chemelil, and that nonetheless tend to issue out
improved payments to farmers Waswa et al (2012).

The availability of a wide market in Nyanza looked into comparison in both Lurambi and
Koyonzo is the reason for the situation in Chemili. Mumias is known as the major purchaser
of the sugarcane that was established specifically on pre-signed contracts which allows for
monopolistic habits that carry on in favor of the company even though works at the farmer’s
expense. The major income deductions crosswise the sites were noted to be on transport,
seed cane, fertilizer and costs of harvesting. Licensing more millers should enable farmers
to select exactly places to carry out their crop selling and hence present them with a
favorable platform opportunity to bargain for prices with particular factories as jointly
interdependent partners, this will ultimately result to reduction in monopolistic tendencies
(Waswa et al. 2012).

Presently, sugarcane enterprises have total management about the procurement process and
supply of major farmers input’s such as engagement in tillage operations, fertilizers,
harvesting and the transportation cost. They therefore decide the prices, which in most
situation likely to be greater in comparison to the normal retail prices prevailing on the

15
market. This aspect is important for milling firms who are monopolist buyers of sugarcane,
because they are a pivot in the chain value of domestic sugar (Waswa et al., 2012). They
have relationships with governments, they take charge of investment patterns witness in
the industry, where their market capability usually grasped by alone firm or groups of firms
in coordination, can affect the pricing and supply of sugar. Smaller economies such as the
one under study possess a further concentrated industry owing to the requirement to
accomplish the economies of scale when compared to the developed countries (Roberts,
2010).

The competition situations present in Kenya as a country are to a large extent dissimilar as
compared to the other focus nations. The recent prevailing situation in Kenya highlights
that the sugar prices are unusually extreme, regardless of the important quantity of recent
entry that has prevailed in the market (Waswa et al., 2012). The sector is undergoing a
shortfall of competitiveness while also there exists concerns of some vested interests
against reform, which in turn will weaken both investment and development. It’s worth
noting that in regards to these concerns, the competitiveness concerning sugarcane sector
in Kenya is particularly to a large extent influenced by the relatively extreme degree of
state intervention relating to that sector (Waswa et al., 2012). The entrance regarding the
newly private millers employing further effective production techniques may transform this
kind of situation even though the currently licensed private millers have undergone through
the accusations of engaging in cane poaching. Cane poaching can be termed as an important
concern as it currently high points on the fact that there exist a number of fundamental
challenges within the extreme input costs, treacherous supply of better-quality cane, and
low cane yields. This in turn leads to an increase in the costs of millers, which are the same
costs being passed through to customers. Strategically, the existent regulations measures
restricting the influx about imports aimed at competing away extreme margins serve a
critical role of sustaining the comparatively extreme sugar prices (Brian et. al.2014).

Similarly, competition issues in Tanzania come about as a result of the vertical relationships
involving distributors, millers or wholesalers. The market involved here is oligopolistic
(with multinationals possessing a great number of the share in the two biggest producers)
while exists a much-limited direct type of competition involving domestic producers
(Roberts, 2010). This situation has a close large relation to the nature of the geographic
market by which sugar factories are extensively distributed. Efficiently, under each zone of

16
sugar in the existing in the country, millers possess both a distributor’s network and
wholesalers or by means of direct distribution through particularly the contracted agents or
even through means of indirect distribution to agents which is often done through the
millers’ sister companies (Roberts, 2010). It appears that the extreme levels regarding
concentration as well as the involvement of vertical linkages amongst the levels of milling
of the market and also considerations of the downstream distribution market is responsible
for the comparatively extreme prices of sugar noticed in Tanzania. Therefore, insufficient
competition plays a role of limiting the magnitude of both dynamism and innovation in the
market, leading to an industry that can’t match the domestic demand. Consumers are not
granted the opportunity to reap the benefits of competition as it’s evident that the
distributors are price takers and similarly since producers possess a great market power in
the areas where they operate at. Further analysis to this, it has been often doubtful that
millers by means of the association industry have organized their attempts with an aim of
limiting the imports’ level coming into the Tanzanian market (Brian et. al.2014).

Therefore, in regards to this context, it’s progressively significant that in situations where
governments are intently engaged in domestic sugar industries, the government requires
take strategic approaches as far as their engagement in markets may influence the attaining
of a more productive competitive results aimed at benefiting the consumers. As it stands,
there seems to exist a more limited regional type of competition in the sugar industry as a
result of monopoly (Dlamini, 2011). Primarily in case-scenarios where firms are granted
opportunities to establish big operations as well as the positions involving the market
power, the governments within agencies for instance; both sugar boards and competition
authorities require to make sure that companies don’t engage in manipulation of the special
advantages to the consumer’s disadvantage domestically and in the region (Brian et.
al.2014).

In South Africa, closer analysis reveals that the competition authorities have typically been
in consideration of the issue in the industry as comprising of inadequate dynamic mode of
competition amongst millers while this aspect is established by a governing structure
seeking to offer protection to these firms (Roberts, 2010). The concerns linked to the
vertical arrangements amongst growers and millers as the case may be secondary to this.
Even though South African companies have been comparatively highly competitive around
the area, the domestic regulatory nature regarding environment has similarly portrayed that

17
persistent advancement from innovation in regards to this market is actually restricted by
the provisions of the same regulatory. Conceivably, this might be intention why a few of
its millers have decided to raise their footprint in another place in the area where there
seems to be lesser markets (with preferred means of entry to European markets) and with
bigger likelihood for both advancement and profitability (Brian et. al.2014).

The study has evidently showcased that even though companies have critically positioned
themselves so well in markets which are characterized by both investment incentives and
trade activities, it’s worth noting that the competitive consequences in the area are highly
going to be affected by protectionism (Duli &Yang, 2015). In regards to protectionism, it’s
worth mentioning that protectionist policies aren’t inevitably mislaid in regards to the
context of current industrial policy; nonetheless they may be dangerously affected or
weakened if the right incentives (and backing mechanisms) aren’t presented to domestic
companies to raise their competitive edge on basis of increased efficiency and innovation.
For example, this might draw in placing conditions on persistent protection state that needs
such firms to match particular export targets or production (Duli &Yang, 2015). Whereas
looking at comparison aspect, this might further include the state in particular addressing
major impediments: for instance, the deformity occurrence in supplying of quality
sugarcane by means of computing the supply of major agricultural inputs to be become
highly economical and reliable. In this way, nations that have perfectly acted into
accordance with the strategy of raising access into the sugar industry (Kenya and Tanzania)
may accomplish the objective of all-encompassing flourishment and the advancement of
the local industry, while making sure that there is dynamic competition inside the domestic
market (Brian et. al.2014).

2.3 Effect of Farm Input Expenses on Sugar Cane Profitability

Farm input expenses is major factor to sugarcane profitability as profit is income minus the
expenses incurred. Nazir, Jariko and Junejo (2013) found that the growers returns were
minimized by deduction concerning the costs of inputs of sugarcane including, DAP, urea,
land preparation, FYM, seed and its application, cost of irrigation and weeding practices.
They also found that sugarcane production is faced by problems of high-priced inputs, low-
priced output, setbacks in payments and insufficient scientific knowledge. The high amount
of inputs for the sugarcane crop is because it has a prolonged duration nature and also the

18
sugarcane production cost has displayed a rising trend being witnessed over the years
(Murthy, 2010).

The surging costs of sugarcane inputs growing in KwaZulu-Natal, specifically in Ntumeni

and Showe, as the planting areas has seen reduced profit for SSGs. The accomplishment
and flourishment of the industry is adversely affected by the rising input costs. Small-scale
sugarcane growers, thus, require coming up with strategies to minimize the impacts of
raising input costs (Zulu, Sibanda & Tlali, 2019). Among the different components of
sugarcane production, it’s worth noting that both land and labour was accountable for 32
percent each in the production cost. GOI, (2016) indicates that the farm inputs prices
comprising of farm wages have had arising tendency over the years. According to Dlamini
and Masuku (2012) adoption of good crop husbandry practices such as weeding in a timely
manner, fertilization, and practices of irrigation will enhance profitability.

Kamruzzaman & Hasanuzzaman (2007), researched on the components influencing the

profitability of production of sugarcane in Bangladesh. Family labour cost, frequency of
applications frequency of fertilizer, cost of urea, and the cost of seed cane were identified
as the main determinants impacting the sugarcane production profitability. Sugarcane
farming being a labour intensive crop farmer is needed to lessen per acre labour, fertilizer
applied and the cost of seed to increase profit margin. The manner in which to cut labour
cost is by introducing of new technology employed for weeding, planting, and harvesting.
To more scientific research is needed to introduce new varieties which results to increase
per acre yield of sugarcane.

The profit levels to be realized in a sugarcane firm are determined by agronomical

determinants for example as, varieties of sugarcane planted, the soil fertility in-place,
timely planting and system of irrigation (Ruth, 2019). Steep escalation in the cost of
cultivation requires a highly-priced for the sugarcane crop as from Business Daily of 5Th
March 2019, it was reported that farmers accused the Transmara Sugar Company of
reducing their pay while farm inputs, transport and gate cutting charges remained high.

Late payment by millers lead to increase input cost by sugarcane farmers as they have to
shoulder the weight of taking up loans with interest and penalties on late repayment on
bank loans that were taken up this inevitably leads to retardation in the sugarcane sector as
reported by The star of 25Th September, In addition, lack of prompt payment to farmers by

19
some millers has also dampened cane development in the sugarcane growing regions, hence
a fall in production in most of the sugar factories. Farm inputs, including fertilizer, seed
cane and other services such as ploughing and harrowing are expensive to carry, farmers
deserve to be paid well to be able to meet all those expenses. In order to reduce input cost,
one needs to address labor costs, seed costs, machinery, input fertilizer, land rents and
transportation costs (Ruth, 2019).

According to Azam and Khan (2010), agricultural productivity is greatly affected by a

number of inputs such as land, labour, capital, seed, fertilizer, irrigation and soil. Malaza
and Myeni (2009) identified seed, fertilization, irrigation, transport costs and ratoon
management as the key elements to be managed for efficient production. The right varieties
for the climate and soils need to be grown. Land has to be prepared taking into consideration
the method of irrigation to be used and it should facilitate proper water movements.
Narayan (2004) estimated a sugarcane production model of sugarcane production in Fiji
and found that the area harvested and fertilizer, labour force and prices paid to sugarcane
farmers had positive influence on sugarcane productivity and profitability in both the short-
and long-run. Hussain and Khattak (2008) studied the economics of sugarcane production
in and found that the area under sugarcane, total fertilizer used, total pesticides and
insecticides used, human labour, tractor labour and total seed cane used were the main
factors affecting sugarcane production.

2.3.1 Labor Cost

Components of the total variable costs include, harvesting and post harvesting, expenditure
on labor for specifically carrying out the following: planting, ploughing, roughing,
weeding, plant protection, and harvesting. Harvesting and post-harvest approach set up the
biggest cost item accounting for 72% of the overall variable costs (Katungi, Wozemba &
Rubyogo, 2011). Zulu, Sibanda and Tlali (2019) in a study on the determinants influencing
the production of sugarcane primarily by small-scale growers situated in Ndwedwe local
Municipality, in South Africa, noted that there is a great percentage rise in wages issued to
farm workers which ultimately possess an important effect on net farm income of SSGs.
These wage increase results from problems undergone by small-scale growers in the
minimal wage adjustments as controlled by labor law raising the financial cost paid to
workers.

20
A study in Bangladesh found that low productivity and profitability in sugar mills is
attributed to practices involving outdated production, insufficient labor, and low-quality
harvests of sugar (Reza, Riazi& Khan, 2016). Graham (2019) observed that as farm wages
goes up, farmers are often faced with less alternatives of mitigating the labor cost. Farmers
are thus pushed to either add output of their workmen by raising their wages, or shift to
computerized processes. It’s notable that each and every selection has great weaknesses.
The output of a worker per day is limited as there is only so much work that can be done
daily, increasing productivity therefore becomes very difficult. Some farms result to
offering their workers production bonuses basing on the number of pounds being produced
which is harvested in the day over and above an already high baseline pay. Labor costs
becomes generally very high-priced, as the price of the crop must rise to enable farmers
realize profits.

Labor-intensive farming, low input practices, low productivity of labour, and lesser return
rates from farming are highlighted as the major challenges faced by smallholder farming
systems crosswise Africa and South Asia (Paudel, Khanal, Justice & McDonald, 2019). It
has been observed that in the current years that the agriculture sector in a lot of developing
nations has been faced with acute shortfall of labour as a result of very quick labor out-
migration that results to crop cultivation delay preparations in nations like Nepal (Paudel
et al., 2019). The labor shortfall is more worsen by up surging rural wages which leads to
a rise in the agricultural cost of production. Although the wage increments might be useful
to the population segment that relies on the income wages, it’s notable that the rise in the
production cost has eroded profit margins for a good number of smallholders (Paudel et al.,
2019).

2.3.2 Machinery Cost

Machinery cost is termed as a main factor in regards to the cost of production. Further
productive usage of machinery for crop production may assist to raise more profits (Najafi
&TorabiDastgerduei, 2018). A great number of farms are small, as farmers engage in
renting farm machinery primarily for carrying out planting, plowing, and harvesting which
is not favorable for maximizing profits. In accessibility of the farm machinery at the time
they need it leads to timeliness costs. When the operations are not accomplished in a timely
manner, the crop value could cut back in either quantity and or quality (Najafi &
TorabiDastgerduei, 2018).

21
The competitive strength of a firm is determined by physical resources; for instance, plant
equipment and technological potentialities Birkenmaier (1999). The firms’ strength is an
essential aspect in recognizing its efficiency as well as unit cost of production. Research
and advancement abilities of entrepreneurs directly determine their ability to introduce
innovations which enhance their overall productivity. Rapid technological flourishment
particularly development of information technology in current years has resulted to
frequent innovations and application of these newer technologies which eases the work
involved and generally increase the overall expected output.

Roka, Baucum, Rice and Alvarez (2010) argue that the input cost in sugarcane farming are
largely recognized by the age of farm machinery, the number of ratio on crops, including
other determinants that contribute in diverse systems of production with inequitable input
and output levels. The study was focused on the costs incurred while growing sugarcane
and the returns therefore and not included on the costs and subsequent returns related with
both sugar refining and sugarcane milling.

2.3.3 Input Fertilizer and Seed Cost and Transportation Cost

Harb and Columba (2010) pinpointed weed control, fertilizer, soil sampling, re-planting
with treated seed cane, as well as the usage of herbicides as crucial factors in the production
of above-average sugarcane yields. In addition to an emphasis was placed on harvesting
operation to maximize profitability (Harb & Columba 2010). Rice, Baucum, and Glaz
(2009) suggest that a rise in input costs increases the yields of sugarcane. In regards to the
input costs; practice of proper soil utilization farming techniques and the inclusion of
fertilizers, chemicals, as well as appropriate maintenance of the farms increase crop yields.
According to Krishna (2011), most farmers invest large sums of money in the farming
activity, when input costs of cultivating sugarcane skyrocket farmers worry about the effect
they will have on their returns. Krishna (2011) further highlights that the government has
a pivotal duty to carry out to make sure that the input costs are lessened with an intention
that farmers are not exploited.

Seed is the basic crop production inputs. Katungi, Wozemba and Rubyogo (2011)
performed a farmer-based seed production cost-benefit analysis for prevalent been in
Kenya. They carried out the study in Nyanza and western parts of Kenya. Katungi,
Wozemba and Rubyogo (2011) found out that seed and organic fertilizers were the key
inputs on with substantial expenditure. In 2014, the business daily in Kenya reported that
22
notice to increase prices by the leading seed producing company will setback the farmers
in seeds purchase. Kenya Seed Company noted that the production cost had increased and
it was seeking to engage the government over price review (Bwayo, 2014). The move could
affect the prices of food and reduce land under staple crops such as maize and beans
(Bwayo, 2014).

Transport cost has an impact on farmer’s returns, the cost of transporting the raw material
is based on the distance which is identified through zoning, each zone having its cost. Also,
the distance to the mill was similarly discovered to be adversely impacting production
performance. Distance covered determines the transportation bill, transporters charges the
farmers between Sh450 and Sh1, 500 to transport sugar cane from their farms to the mills,
the longer the distance the higher the cost. This cost has become critical as firms source for
the raw material in far flung zones according to the Kenya Sugar Board (2009). The
distance is calculated based on the radius between the factory and the farm. According to
(Maurice, 2019), sugar companies both state-owned and private to build more weigh
bridges to cut the cost of transport usually incurred by farmers.

2.3.4 Land Rent

Land is considered an important productive asset by rural residents in developing countries.

Ownership of land, usage, and how it is traded or swapped has further stretching
implications for equity, productivity, and entire economic development (Jin& Jayne, 2011).
A lower rent or lease price on land will lead to lower input cost and thus high profitability
thus it is imperative that one negotiates and leases land that is affordable and also of high
quality and proximity to sugar factories or millers. One should also negotiate the land rates
in accordance to expect revenue as lease price may seem cheap in regards to current market
forces whereas they may slump in the future.

Land consolidation by way of farmland rental may boost agricultural output. This is
achieved by engaging in transferring of farmland from lesser productive households
primarily to a further productive one. Productive households equalize the marginal product
of land as there are various labor endowments (Liu, Wang, Tang, & Nan, 2017). Mbudzya
(2017) carried out a study on how agricultural land rental on the market participation affect
agricultural income of small-scale farmers in Kwale County, Kenya. He established that
here is no significant impact on agricultural income accrued by participation in agricultural
land renting.
23
Mbudzya (2017) recommended that stakeholders should develop policies geared towards
reduction in transaction costs and land rental prices. Development in communication and
road infrastructure will fast track reduction in transportation cost by easing the access to
information and agricultural land markets. To encourage participation in agricultural land
rental market there is a necessity for investment especially in the offering of economical
and quality formal education, existence of appropriate demand-driven extension services
and low cost readily available credit. Participation in agricultural marketing in these
favorable conditions will increase agricultural income.

2.4 Effect of Farm Size/Scale of Farming on Sugar Cane Farming Profitability

Farm size is defined as the land that is dedicated to growing of sugarcane measured in
hectares (Zulu, Sibanda & Tlali, 2019). Zulu, Sibanda and Tlali (2019) the case of small-
scale farmers, the assumption drawn here is that they possess a restricted managerial
capacity of carrying out production in their farms. Small-scale sugarcane growers, thus,
may exclusively operate small-scale farming in the provision that they own the exemplary
skills to make sure that the kind of relationship involving both cultivated farmland and
output is actually taken care of through applications of the right amount of inputs which
are particularly looked at per the size of their farms. It is argued that size is an essential
condition for the accomplishment concerning economic performance, though it’s
insufficient (Merce, Merce & Pocol, 2016). It has been widely observed that there exist a
negative relationship involving farm size and productivity, an increase of farm size leads
to a decrease of farm productivity and in this case smaller farms are more productive than
large ones (Merce, Merce & Pocol, 2016). Emana & Gebremedhin (2007) however, noted
that the association amongst the farm size and crop output (tonnes per ha) may not be pre-
determined. Consequently, in regards to a positive or even a negative correlation among
the cultivated farm size as well as the sugarcane production by small scale farmers should
be expected.

The debate of land should be left primarily on the hands of larger scale commercial farmers
or be on the hands of a multitude of smallholders is prevalent. Hundreds of millions
regarding the small-scale farmers of China, Japan, and in another place in Asia however,
enlighten us more that farm size is not regarded as the main factor of productivity. These
farmers acquire productivity level per unit area of land equal to or higher in comparison to
those accomplished by large-scale farmers in whatever place in the world and we all know

24
that high productivity is directly proportional to profitability. The literature on the inverse
farm size-productivity relationship (IR), has commonly recognized that productivity of
small farms is much greater as compared to the larger farms. A good number of these
studies are based on data in whose scope ranges between zero and five hectares. However,
farm size distributions is rapidly changing in parts of Sub-Saharan Africa where “Medium-
scale” farm landholdings of between five to 100 hectares recently is accountable for a
considerable and thriving share of African farmland in a lot of nations (Jayne et al., 2016).

Use of modern technology is transforming productivity by increasing precision in farming

in large farms can in a few scenarios be reversing the historical inverse in regards to farm
size-productivity relationship (Foster & Rosenzweig, 2017). Lamb (2003) observes that
small farms could acquire greater yields as compared to larger farms as a result of further
intensive usage of labor, yet the output level is relatively lower due to deductions of the
labor cost. Study findings looking at the relationship amongst farm size and profits have
typically either reversed the IR or to some extent even weakened it.

Wickramaarachchi & Weerahewa (2018) did a study finding of the relationship between
land size and output, their results presented mixed outcomes concerning the inverse
relationship between size of the land and output discovered in a number of developing
countries. They noted that although the relationship between plot size and the productivity
of land was without any doubt good, an inverse relationship between both farm size and
productivity of land was notable as land size heightened above a certain limit. Thapa (2007)
did a study examining the relationship involving farm size and productivity in Nepal. The
analysis applies models both enabling for and not enabling for village dummies, irrigated
land ratio, as well as other socio-economic variables comprising of the households, family
size and belonging to caste groups. The result supported the widely held notion of an
inverse relationship involving both farm size and production per hectare. The usage of total
cash input as well as labor hours per hectare was concluded to be much greater on small
farms. The research findings regarding regression equations permitting for village dummies
and inclusion of other socio-economic variables does not support or assist in the
explanation that the inverse relationship involving both farm size and output is as a result
of variation in areas and accessibility to resources.

Zulu, Sibanda and Tlali (2019) did a study on determinants influencing the production of
sugarcane by Small-Scale Growers in South Africa. Sibanda, Zulu, & Tlali (2019)
25
concentrated on a number of factors on the crop management practices including cultivated
land size, labour, and fertilizer, urea, and chemicals applied. Zulu, Sibanda and Tlali (2019)
study findings from the function of production which failed to present evidence that small
scale growers performed cultivation of land size which is statistically necessarily linked
with sugarcane production.

2.4.1 Farm Size/Scale of Farming Profitability

Alvarez &Schueneman (1991) have the scrutinize that in order aimed at achieving
economies of scale and to assist the progress of mechanical harvesting of the crop, while
there is a necessity to have a considerably bigger farm size. This made the trends in cost
and return easier and more reliable to project. They add that farms having their location
placed nearby the free zones, which is lower than 25 kilometers from the factory often
undergo lesser charges as compared to those in faraway areas. Literature from both Latin
America and Asia has in most cases reinforced the findings about an inverse relationship
that is primarily between productivity and the farm size (Kagin et. al., 2015).

Ogwang (2009) used Cobb- Douglas production function to determine factors affecting
sugarcane productivity while gross margin analysis was used to determine profitability of
sugarcane production. The results indicated that sugarcane farmers were getting positive
gross margins from their sugarcane enterprise. The Cobb-Douglas results revealed that
sugarcane acreage (farm size), amount of labour used and the distance from farms to factory
were statistically significant. Baiyegunhi and Arnold (2011) investigated the economics of
sugarcane production in Eshowe and Entumeni areas of KwaZulu-Natal. Sugarcane yield
per hectare was used as the dependent variable and the explanatory variables included in
the model were farm size (that is, the area of land devoted to sugarcane, measured in
hectares) and other explanatory variables were stated in financial terms (Rands/hectare),
these were farm staff, fertilizer, chemicals, fuels/lubricants and machine maintenance. The
results showed that all the explanatory variables were significant in explaining the
sugarcane yield per hectare.

Mbuyazwe and Barnabas (2012), while studying the relationship between the size of the
farm and the amount of cane harvested in Swaziland came into conclusions that generally
large-scale sugarcane farmers got the greatest level of yields as compared to both the

26
medium scale farmers and small-scale farmers. They draw conclusions and recognized that
sugarcane yields productions were being affected by three variables: For instance, distance
from the farm to the mill, hand application fertilizer man days and finally factor on the
strength of labour. Distance from the mill largely affected the yield reducing it by means
of 0.44 ton per hectare for each 1kilometre transition in distance between both the farm and
the mill. Management processes in the farm and the input of production were also
significant factors about the level of cane output.

Imperfect determinant markets might occur in situations when there is a divergent in price
factors facing both small and big farms. The agricultural wage rates in developing nations,
precisely those of big farms are likely to be a bit higher than those of large farms
(Kaginetal., 2015).The use of family labor is completely utilized on small-scale farms in
the developing nations, they incur a less imputed opportunity cost. These results to huge
net output value per hectare in comparison to large farms ( Hazell et al. 2010). As the major
beneficiaries of farm profits, the owner-operators are likely to apply greater attempts in
comparison employed large farm managers (Frisvold, 1994). Years of planting sugarcane
over the years have given owner-operators similarly possess excellent knowledge regarding
he local soil and climatic circumstances small farms tend to have a competitive edge in
comparison to non-family operated large farms (Rosenzweig &Wolpin, 1985).

Land quality which has been left out when assessing the productivity of farm size
relationship as it was further discovered to contribute to the inverse ( Assunção & Braido,
2007). Sometimes it’s debated that small farms are further fruitful since owner-operators
sell or lease out the unfertile land and farm their highest quality land (Larson et.al.2013).
Foster & Rosenzweig (2017) holds that, the inverse relationship regularly yet holds in spite
of when land quality and unnoticed impacts are managed for employing panel data
estimation technique

Systematic measurement errors in reporting of the sizes of plots have similarly been
recognized to be significant. The recent novel studies accomplished by Dillon et al.
(2016) applying Living Standards Monitoring Surveys (LSMS) data as well as the GPS
measurements plots in Uganda and Nigeria, in that order, discovered that the correction
regarding measurement errors especially in plot size highlights more emphasis on the
inverse relationship hypothesis, slightly following the range of examined farm sizes
27
engaging in such studies. Bigger farms were highly feasible to under-report the size
regarding their landholdings, although meager farms are often likely to exaggerate them,
hence bolstering more the inferences in offering enough support to the inverse relationship.
Nonetheless, has been earlier mentioned, inverse relationship studies established on LSMS
data typically incorporate only some farm observations which shows estimated figures of
over 10 hectares. While a number of findings primarily on the farm size-productivity
relationship has discovered that the inverse relationship hypothesis holds, a few study-
findings argue against it.

Others on the other hand, have established a U-shaped relationship between both out-put
and farm size. For instance, in Zambia86% of the study sample, maize yield declined with
decline in managed farm size eligible to around three hectares, and the increase after that
(Kimhi 2006). According to Foster & Rosenzweig (2017), utilizing data from India, found
that a U-shaped relationship can increase as a result of two determinants: (a) fixed costs of
transportation in labour markets that might contribute in an under-provision of employed
farm labor, which in turn depresses the productivity. This becomes more severe as more
labour is needed as the farms size increases and a necessity for having more labor (it’s
worth noting that this finding would therefore bolster the inverse relationship hypothesis at
less sizes of the farm); and (b) economies of scale as a determinant in the use of machinery,
which could contribute in more productivity level that is way beyond the minimal farm size
at the point which mechanization tends to turn out attractive. This study makes use of data
to scrutinize all of these hypotheses established on the case-scenario of high-productivity
region of Kenya.

2.5 Chapter Summary

In summary, this chapter has reviewed literature related to assessment of profitability of
sugarcane farmers in Kenya and specifically Malava Sub County in Kenya. The chapter
has expounded on the effect of sugar cane factory pricing on profitability of farmers, effect
of sugar prices on factory pricing, adverse effects of corruption and Cartels in the industry,
role played by factories Undercutting Committee by setting their own prices, impact of low
supply of raw materials in setting factory prices and also the effect of monopolies on the
prices of the sugarcane in the factories.

The chapter also examines the effect of input expenses whilst focusing on pest management
techniques, seed costs, state of machines used, availability and cost of fertilizers,
28
transportation cost incurred while delivering the sugarcane to the factories and also the
prices of renting land by the sugarcane farmers. The chapter finally examines the effect of
farm size/scale of farming (output/units produced) on sugar cane farming profitability. The
next chapter, which is chapter three, describes the methodology which explains and
describes the methods that were followed in undertaking the study. Chapter four then
presents the findings of the study based on research questions and then followed by chapter
five which presents the summary of the findings, the discussion, conclusion and
recommendations of the study.

29
 CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 Introduction
This chapter introduces the methodology that was employed to accomplish this study.
Research methodology simply refers to an operational framework under which the facts are
placed with an aim that their signification can be examined with further clarity. The
preparation of the design is the task that follows the definition of the research problem. The
methodology concerning research included research design, the sampling strategy and the
population that was studied, the process of data collection, the instruments that were
utilized for gathering data, and the manner in which data was analyzed and presented.

3.2 Research Design

Cooper and Schindler (2014) inform us that research design refers to the plan and structure
about investigation remarkably conceived and aimed at acquiring solutions to the research
questions or the objectives. It comprises a blueprint of what the researcher would do from
writing hypotheses and also on their operational implication to the final analysis of data. A
researcher may pick from the following; an exploratory, explanatory, descriptive, cross
sectional studies, case study, longitudinal or even choose from time series research designs.
This study used a descriptive research design which is more focused with figuring out
aspects such as what, where and how of a phenomenon (Cooper & Schindler, 2003).
Descriptive research design approach provides factual data, accurate data and systematic
data (Mugenda, 2012). Thus, the preference of descriptive research design is based on the
fact that in this study, there is an interest in the state of affairs already existing in the field
and no variable was to be manipulated. The independent variables of the study will
comprise of sugarcane factory pricing, farm input costs and farm size while the dependent
variable will be the profitability of sugarcane farming.

3.3 Population and Sampling Design

3.3.1 Population
Cooper and Schindler (2014) describe population as being the entire collection of
components regarding which individuals might desire to draw inferences. Burt, Barber and
Rigby (2012) define it as a set of all individuals that are relevant to a particular study. The

30
population of the study included representatives of the farmers and agricultural extension
officers in Malava Sub County within Kakamega County. The choice of including farmers’
representatives into the study is due to the fact that they represent the farmers and are
believed to have sufficient information on issues affecting farmers on their sugarcane
production venture.

Table 3.1 Population Distribution

Stakeholders Number respondents Percentage

Agricultural extension officers 10 1.5
Farmers Representatives 633 98.5
Total 643 100
Source: Butali Sugar Company, (2019)
3.3.2 Sampling Design
This is the manner in which cases are picked for observation (Cooper and Schindler, 2014).
It maps out the process that is followed to draw a sample of a study.

3.3.2.1 Sampling Frame

A sampling frame can be defined as the list of elements from which the sample is actually
drawn (Cooper & Schindler, 2014). For this research, the sampling frame comprised of a
list of all the representatives of sugarcane farmers and agricultural extension officers in
Malava Sub County within Kakamega County. The frame was selected from registered
sugarcane millers in Malava Sub County, Kakamega County

3.3.2.2 Sampling Technique

A sampling technique includes the process of selecting an example from a population
(Cooper & Schindler, 2008). Sampling is the process of choosing the study subjects or
objects from a larger population Mugenda (2003). Stratified random sampling technique
was used since population of interest was not homogeneous. This was done by first
grouping the target respondents in to two strata based on their roles, the first one comprising
of the agricultural extension officers and the second one containing farmers representative.
Through proportional allocations, a given number of respondents were drawn from each
stratum using simple random sampling technique and collectively formed our study sample.

31
This also ensured that the representation of the population was equitable by allowing views
from all stakeholders. This made it easier to obtain high quality information (Cooper &
Schindler, 2014). Researchers can employ stratified sampling when they want to observe
existing relationships between two or more sub groups. The use of stratified sampling
ensured that the two categories form part of the selected sample without any category being
excluded. Due to the fact that the population was big, a sample was taken from the entire
population.

3.3.2.3 Sample Size

The sample size is a representative of the target population. Saunders, Lewis and Thornhill
(2012) argue that the larger the sample size the lower the likelihood of error in generalizing
to the population. They also inform us that the choice of sample size is governed by: the
confidence you need to have in your data, the margin of error that you can tolerate, the type
of analysis to be undertaken, and to a lesser extent, the size of the total population from
which your sample is being drawn. The study sample size was calculated using the Yamane
(1967) formula illustrated below to give a sample size of 247.

N
n=
1 + N (e 2 )

Where
N -is the population size of the study (N=643)
n - Sample size of the study
e - is the desired margin of error (0.05)
643
n= = 247
1 + 643* 0.052

Proportional allocation per stratum will be done using the formula shown below

Stratum Population Total

Stratum allocation =  247
Target Population Total

Resulting to the following allocations for the agricultural extension officers and the
farmers’ representatives
10
Agricultural extension officers =  247 = 4
643

32
 633
Farmers representatives =  247 = 243
643
After obtaining the allocations, simple random sampling was done in each stratum to select
4 agricultural extension officers and 243 farmers’ representatives totaling to a sample of
247 respondents as established by Yamane formula

Table 3.2 Sample Size Distribution

Cadre Target Population Sample Size

Agricultural Extension Officers 10 4
Farmers representatives 633 243
Total 643 247

3.4 Data Collection Methods

Primary data collection method was used in this study. Data was collected using
questionnaires that were developed by the researcher based on the research questions. A
questionnaire is basically a research instrument that contains formulated questions that are
geared to answer specific research queries, and are usually familiar to most people, are cost
effective, reduces bias, are easy to analyze and are considered less intrusive (Creswell,
2014), thus best suited for conducting research. The questionnaires included structured
(close-ended) and unstructured (open-ended) questions and were administered by the
research assistants to the respondents.

The questionnaires were divided into parts each representing a different category of
questions. The first part of the questionnaire required the respondents to provide general
information such as gender, age and how long they have been sugar cane farmers. The
questions in each section representing the each specific objective were structured using the
Likert Scale where respondents were to indicate their level of agreement or disagreement.

3.5 Research Procedures

According to Cooper and Schindler (2014), research procedures are the detailed description
consisting of step by step guide on how the research should be conducted to meet the
objectives of the study. The researcher performed a pilot study of the questionnaire to
ascertain suitability of the tool before the actual administration. A pilot test is defined as a
small-scale preliminary study conducted with the aim of evaluating feasibility of a study

33
and improving upon the study design prior to actualization of the full-scale research
(Bryman, 2012). The questionnaire was pre-tested on 24 respondents, which was10% of
the targeted sample size. The respondents were selected randomly from the target
population in order to establish the instrument’s validity and reliability. Validity of the
research instrument can also refer to the extent by which the instrument measures what it
was intended to while reliability is the degree of consistency of the instrument on repeated
trials Gay (1981). Validity of the questionnaire was measured by establishing whether the
respondents interpreted the questions in a uniform way. The researcher applied the test-
retest approach to establish the reliability of the research instrument. This entails
administering the same questionnaire twice to the same respondents after a given time
interval (two weeks) and make a comparison between the two sets of data to check whether
they were consistent with their responses. The findings from the two tests were then be
correlated using the Spearman-Brown formula and reliability calculated. (Where r is the
actual correlation between the two data sets)

2r
R=
1+ r

This allowed the investigator to modify and make necessary changes to the questionnaire
for objectivity and efficiency of the process. Before the actual data collection process, the
researcher obtained a research permit from the National Commission of Science,
Technology Innovation (NACOSTI) and a letter of introduction from the department.
NACOSTI letter allowed the researcher to collect data from the respondents while the
introduction letter allowed the researcher to easily introduce herself to the respondents.
According to Creswell (2003), participants should not be inconvenienced during the
process. To ensure a high response rate, the researcher request the respondents to cooperate
with the research assistants and give them information to assist them fill the questionnaires
for them on their behalf. Before the data analysis, data obtained through questionnaires was
validated, edited and then coded. The returned instruments were scrutinized to determine
correctness and accuracy.

A reliability analysis was also conducted to determine the reliability of the data collection
tool during the pilot study. For a study to be reliable, the study tool has to have a Cronbach
Alpha of more than (0.7). For each independent variable, the reliability coefficients are
provided in table 3.3.

34
Table 3.3: Reliability Analysis

Variables Alpha Value

Profitability of Sugarcane Farming 0.776
Sugarcane Factory Pricing 0.764
Farm Input Costs 0.801
Farm Size 0.783

3.6 Data Analysis Methods

Cleaned data was analyzed both qualitatively and quantitatively i.e. the open-ended
questions in the questionnaire were analyzed qualitatively while the closed ended questions
were analyzed quantitatively. Qualitative data was analyzed thematically which entails
establishing patterns and themes within data. This followed a systematic process whereby
the first step entailed generating initial codes then search for themes then review the themes
followed by defining and naming the themes and finally producing a report. Quantitative
data was first coded into Statistical Package for Social Sciences (SPSS) software before the
analysis. Both descriptive and inferential statistics were obtained. Descriptive statistics
including the mean, standard deviation, frequency distribution, percentage distribution
were used to describe the general characteristics of the data. Under inferential statistics,
regression analysis was done in order to establish how a set of explanatory variables
(Sugarcane factory pricing, Farm input costs and farm size/scale) affect the response
variable profitability of sugarcane farming. The regression models developed were of the
following form

P = β0 + βi Xi +ε
Where:
P= Profitability of Sugarcane Farming
β0= Constant (The intercept of the model)
βi= Coefficient of the independent variables
Xi = Independent Variables (Factory Pricing, Farm Input Costs and Farm Size)
ε= error term

35
3.7 Chapter Summary
This chapter described the methodology used in the study. The research design is
descriptive in nature. The population comprises of agricultural extension officers and
farmers’ representatives. Stratified random sampling technique was used to select the
sample in which 247 respondents. The population was categorized into two categories
namely agricultural extension officers and farmers’ representatives. Information was
collected using a questionnaire developed by the researcher. The questionnaire developed
was pilot tested and modified before being administered to the respondents. The chapter
has also indicated that data was analyzed both qualitatively and quantitatively. Chapter four
presents the findings of the research, while chapter five provides the summary, discussion,
conclusion and recommendations.

36
 CHAPTER FOUR

4.0 RESULTS AND FINDINGS

4.1 Introduction
The study findings and results are presented in this chapter. The findings on this chapter
discuss the profitability of sugar cane farming among sugarcane farmers in Malava Sub
County in Kakamega County. The analysis of data was guided by the following research
questions, i.e., What is the effect of sugarcane factory pricing on sugar cane farming
profitability among sugar cane farmers; What is the effect of farm input costs on sugar cane
profitability among sugar cane farmers and What is the effect of farm size/scale of farming
(output/units produced) on sugar cane farming profitability among sugar cane farmers.

4.2 General Information

This section presents demographic information of the respondents who took part in the
study. It presents findings on the study’s response rate, gender of the respondents, highest
level of education attained by the respondents, age of the respondents, years of experience
the respondent has in sugarcane farming and other sources of income that the respondents
have other than sugarcane farming.

4.2.1 Response Rate

This subsection presents the response rate of the study. One hundred percent response rate
was attained because the questionnaires were administered by the researcher herself with
the aid of research assistants. The response rate is provided in Table 4.1.

Table 4.1 Response Rate

Respondents Category Frequency Percentage
Farmers 243 98.4
Response Extension Officers 4 1.6
Farmers 0 0
Non-Response Extension Officers 0 0
Total 247 100

37
4.2.2 Gender of the Respondents

This subsection presents information on the gender of the respondents who took part in the
study. Majority of the respondents (66.7%) were males while 33.3% of them were males.
These findings clearly indicate that, when it comes to gender distribution among sugarcane
farmers there is a clear domination of male gender in the sector. The findings are provided
in Figure 4.1.

Figure 4.1: Gender of the Respondents

4.2.3 Highest level of Education of the Respondents

This subsection presents information on the highest academic qualification of the

respondents who took part in the study. Most of the respondents (24.7%) had attained
secondary education as their highest academic qualification, followed by those who had
attained primary education at 21.4%. Other respondents’ highest academic qualifications
were as follows; 18.9% of them had diplomas, 14% had certificate, 12.3% had bachelors’
degree, 5.3% of them had masters’ and 0.8% of them had PhD. On the other hand, 2.5% of
the respondents had not attended any formal education. From the findings, 51.3% of the
farmers had post-secondary education. The findings are provided in Figure 4.2.

38
Figure 4.2: Highest Academic Qualification of the Respondents

4.2.4 Age of the Respondents

This subsection presents information on the age of the respondents who took part in the
study. From the findings majority of the farmers (52.4%) were young adults between 36
and 50 years old. Other age distributions were as follows; 33.3% of the farmers were
above 50 years and 13.2% were aged between 21 and 35 years old. This indicated that the
sector was clearly dominated by young adults. The findings are provided in Figure 4.3

Figure 4.3: Age of the Respondent

4.2.5 Years of Experience in Sugarcane Farming

This subsection presents information on the number of years the farmers who took part in
the study had practiced sugarcane farming. From the findings, majority of the farmers
39
(40.3%) had been in sugarcane farming for 10 years. The percentage distribution of other
farmers’ years of experience in sugarcane farming was as follows, 23.5% had practiced
sugarcane farming for over 15 years, 7.4% of them had practiced it for 12 years, 6.6% of
them for 15 years, 5.3% of them for 11 years, 5.3% of them for 6 years, 3.7% of them for
5 years, 3.3% of them for 7 years, 1.6% of them for 2 years, 1.2% of them for 8 years, 1.2%
of them for 4 years and 0.4% of them for 3 years. These findings shows that most of the
farmers in this study had vast experience in sugarcane farming as 83.1% of them had at
least 10 years of experience and above. The findings are provided in Figure 4.4.

Figure 4.4: Years of Experience in Sugarcane Farming

4.2.6 Other Sources of Income other than Sugarcane farming

This subsection presents information on other sources of income for the farmers other than
sugarcane farming among farmers who took part in this study. From the findings, majority
of them (43.6%) were in formal employment, 33.3% of them obtained extra income from
farming other crops other than sugarcane farming and 22.2% of them obtained extra income
from informal employment. The findings are provided in Figure 4.5.

40
Figure 4.5: Other Sources of Income

4.3 Sugarcane Factory Pricing and Profitability of Sugarcane Framing

This section presents information on sugarcane factory pricing. It focuses on establishing
the effect of sugarcane factory pricing on sugar cane farming profitability. Farmers were
asked on their level of satisfaction with the millers’ prices and their impact on sugarcane
farming profitability. A likert scale was used which comprised of statements on sugarcane
prices in which each respondent was required to give his/her response on the level to which
he/she agrees with the statement.

4.3.1 Satisfaction with Sugarcane Pricing by Millers

This subsection presents information on the farmers’ satisfaction with the millers’
sugarcane prices. Most of the farmers (92.6%) were not satisfied with the prices. Most of
them believed that the prices should be revised upwards in order for them to maximize on
the profits. The findings are provided in Figure 4.6.

Figure 4.6: Satisfaction with Sugarcane Pricing by Millers

41
The study further sought to establish the extent of impact of sugarcane millers’ prices on
the profitability of sugarcane farming. From the farmers who were satisfied with millers
prices, most of them (33.3%) stated that the extent was low while a further 16.7% indicated
that the extent was very low bringing the total to those who acknowledged the extent of the
impact being low at 50%. On the other hand, 22.2% of them stated that the extent was great
and a further 11.1% indicated that the extent was very great, bringing their total to 33.3%.
The remaining 16.7% of the farmers indicated that the extent was moderate. The findings
are provided in Figure 4.7.

Figure 4.7: Extent to which Pricing has positively impacted on Profitability

On the other hand, from the farmers who were dissatisfied with millers’ prices, most of
them (51.6%) stated that the extent was very great while a further 32% indicated that the
extent was great bringing the total to those who acknowledged the extent of the impact
being great at 83.6%. On the other hand 7.1% of them stated that the extent was low and a
further 3.6% indicated that the extent was very low, bringing their total to 10.7%. The
remaining 5.8% of the farmers indicated that the extent was moderate. The findings are
provided in Figure 4.8.

42
Figure 4.8: Extent to which Pricing has negatively impacted on Profitability

The study further sought to establish whether millers’ prices have a significant effect on
the profitability of sugarcane farming. Chi square test was used to test the hypothesis. Since
the computed chi-square value was greater than its critical value and equally the p-value
was less than its corresponding level of significance we therefore reject the null hypothesis
in favour of the alternative hypothesis. Conclusion can therefore be made that, millers’
prices have a significant effect on the profitability of sugarcane farming. The findings are
provided in Table 4.2.

Table 4.2: Millers’ Prices effect on Profitability of Sugarcane Farming

Test Computed Critical Degrees of P-Value Level of Decision
Value Value Freedom Significance

Chi- 2992.55 468.78 420 0.00 0.05 Reject

square H01

43
4.3.2 Millers’ Price per Tonne

This subsection presents information on the millers’ price on sugarcane per tonne. Even
though there were variations on the millers’ prices, most of them (39.5%) stated that the
price per tonne was 3800 Kenya shillings which was closely followed by those who stated
the price was 3700 Kenya shillings at 38.7%. A further 13.2% of them stated the price was
3900 Kenya shillings and the remaining 8.6% stated the price was 4000 Kenyan shillings
per tonne. The findings are provided in Figure 4.9.

Figure 4.9: Millers’ Price per Tonne

4.3.3 Estimated Cost of Production per Acre

This subsection presents information on the cost of production of sugarcane per acre. Even
though there were variations on the estimates of the cost of production amongst farmers,
most of them (41.2%) estimated the cost of production of sugarcane per acre at
approximately 50,000 Kenya shillings while 26.3% of them estimated the cost at
approximately 55,000 Kenya shillings. A further 19.3% of them estimated the cost at
60,000 Kenya shillings, 7.4% of them estimated the cost at 45,000 Kenyan shillings and
the remaining 5.8% estimated the cost of production at 40,000 Kenyan shillings per acre.
The findings are provided in Figure 4.10.

44
Figure 4.10: Estimated Cost of Production per Acre

4.3.4 Millers’ Sugarcane Prices

This subsection presents information on the farmers take on millers’ sugarcane prices. On
fairness of the prices, most farmers (94.7%) indicated that the millers’ prices were neither
fair nor reasonable. Most of them indicated that the prices provided by the millers did not
effectively cater for the cost of production and cost of transportation of sugarcane to
collection points or to the millers as indicated by 83.9% and 91.8% of them respectively.
Most of the farmers (90.9%) stated that the millers’ prices do not consider market demand
in the sense that, even when the sugar prices increase the millers do not revise their cane
buying prices upwards. During price adjustments by millers most farmers (88.5%) stated
that their representatives are neither informed nor consulted before any adjustments are
initiated. On stability of millers’ prices, most farmers (72.8%) stated that their prices are
unstable and keep on fluctuating to favour the millers. On a positive note, most farmers
(85.2) acknowledged that the millers are good at honoring their agreement on paying them
promptly after making deliveries based on the agreed price. Composite mean was used to
establish the level of satisfaction with millers’ prices of sugarcane farming. Using the rating
scale on appendix 3 composite mean of 2.03 indicates that the level of satisfaction with
millers’ prices is low among farmers in Malava Sub County. The findings are provided in
Table 4.3.

45
Table 4.3: Millers’ Sugarcane Prices
S.D D N.S A S.A Mean ±
F (%) F (%) F (%) F (%) F (%) S.D
Prices are very fair and 147(60.5) 83(34.2) 10(4.1) 3(1.2) 0(0) 1.46±0.638
reasonable
Prices consider farmers’ 160(65.8) 44(18.1) 35(14.4) 1(0.4) 3(1.2) 1.53±0.844
cost of production
Prices consider farmers’ 137(56.4) 86(35.4) 14(5.8) 3(1.2) 3(1.2) 1.56±0.766
cost of transportation
Prices consider market 116(47.7) 105(43.2) 14(5.8) 4(1.6) 4(1.6) 1.66±0.799
demand i.e. increased
when sugar prices
increase
Prices adjustments are 106(43.6) 109(44.9) 22(9.1) 4(1.6) 2(0.8) 1.71±0.766
done after consultations
with farmers
representatives
The prices are stable i.e. 107(44) 70(28.8) 19(7.8) 37(15.2) 10(4.1) 2.07±1.225
they rarely fluctuate
The prices agreed are 2(0.8) 6(2.5) 25(11.5) 111(45.7) 96(39.5) 4.21±0.802
honoured and paid in time
to farmers upon delivery
Composite Mean=2.03
4.3.5 Regression Analysisof Sugarcane Factory Pricing and Profitability

Regression analysis was done in order to establish how sugarcane factory pricing affects
the response variable profitability of sugarcane farming. Table 4.4 shows R-square of
42.6% which implies that the explanatory variable accounted for 42.6% of the variations in
profitability, while the remaining 57.4% is accounted for by other factors.

Table 4.4: Regression Model Summary of Sugarcane Factory Pricing and

Profitability
R R Square Adjusted R Square Std. Error of the Estimate

0.653 0.426 0.423 0.905

The fitted model was diagnosed and found that the regression model was statistically
significant at 5% level of significance since the P-value of 0.000 is less than 0.05. This
shows that the explanatory variable sugarcane factory pricing affects the response variable
profitability of sugarcane farming. The findings are provided in Table 4.5.

46
Table 4.5: ANOVA of Sugarcane Factory Pricing and Profitability
Model Sum of Degrees of Mean F Sig.
Squares freedom Square
Regression 146.425 1 146.425 178.753 0.000
1 Residual 197.415 241 0.819
Total 343.840 242

The explanatory variable Sugarcane Factory Price was significant due to the fact that its p-
value is less than 0.05. A summary of the coefficients of regression equation are provided
in Table 4.6. The fitted regression model therefore became as follows:

P=0.861+ 0.801SFP.

Table 4.6: Coefficients of Regression Equation of Sugarcane Factory Pricing

andProfitability
Unstandardized Standardized T Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) 0.861 0.208 4.139 0.000
SFP 0.801 0.060 0.653 13.370 0.000
4.4 Farm Input Costs and Profitability of Sugarcane Framing
This section presents information on the farm input costs. It focuses on establishing the
effect of farm input costs on sugar cane farming profitability. Farmers were asked on the
effects of farm input costs on profitability of sugarcane farming and the costs of farm inputs.
A likert scale was used for both cases in which one comprised of statements on the effects
of farm input costs on sugar cane farming profitability and the other one on farm input costs
in which farmers were required to give their responses on each of the statements.

4.4.1 Costs of Farm Inputs

This subsection presents information on the nature of costs of the farm inputs used in
sugarcane production. From the findings, most of the farmers (52.3%) stated that the costs
of fertilizers are very high. Most of the farmers indicated that the costs of seedlings, costs
of ploughing and preparing land and the costs of labour during planting and weeding are
high. Most of them equally indicated that the cost of labour during harvesting and the cost
of transportation to millers are moderate. On the other hand, most of the farmers stated that

47
the cost of purchasing farm equipments, the cost of hiring agronomist, the costs of
pesticides and herbicides and the costs of watering and security services are low.

Arithmetic means along with the rating scale in appendix 3 were used to establish the
general nature of the costs of the farm inputs used in sugarcane production. Arithmetic
mean of 1.61 indicated that the fertilizers costs are generally high. The costs of seedlings,
ploughing and land preparation, labour during planting and labour during weeding are also
generally high as indicated by the arithmetic means of 2.30, 2.26, 2.23 and 2.43
respectively. The costs of labour during harvesting and transportation to millers are
generally moderate as indicated by arithmetic means of 2.56 and 2.79 respectively. The
costs of purchasing farm equipments, the cost of hiring agronomist, the costs of pesticides
and herbicides and the costs of watering and security services are generally low as indicated
by arithmetic means of 3.78, 3.76, 3.73 and 3.92 respectively. The findings are provided in
Table 4.7 where the abbreviations used were as follows: V.H-Very High, H- High, M-
Moderate, L-Low and V.L-Very Low.

Table 4.7: Costs of Farm Inputs

V.H H M L V.L Mean ±
F (%) F (%) F (%) F (%) F (%) S.D
The costs of fertilizers 127(52.3) 94(38.7) 15(6.2) 3(1.2) 4(1.6) 1.61±0.797
The costs of seedlings 61(25.1) 86(35.4) 70(28.8) 14(5.8) 12(4.9) 2.30±1.062
The cost of ploughing and 52(21.4) 114(46.9) 50(20.6) 17(7.0) 10(4.1) 2.26±1.004
preparing land
The costs of labour during 45(18.5) 114(46.9) 67(27.6) 17(7.0) 0(0) 2.23±0.831
planting
The cost of labour during 61(25.1) 74(30.5) 67(27.6) 24(9.9) 17(7.0) 2.43±1.171
weeding
The cost of labour during 58(23.9) 66(27.2) 67(27.6) 28(11.5) 24(9.9) 2.56±1.246
harvesting
The cost of transportation to 47(19.3) 60(24.7) 64(26.3) 42(17.3) 30(12.3) 2.79±1.284
millers
The cost of purchasing farm 20(8.2) 25(10.3) 15(6.2) 111(45.7) 72(29.6) 3.78±1.212
equipments
The cost of hiring an 17(7.0) 12(4.9) 55(22.6) 87(35.8) 72(29.6) 3.76±1.139
extension officer
The cost of chemicals 12(4.9) 27(11.1) 30(12.3) 119(49) 55(22.6) 3.73±1.083
(pesticides and herbicides
The cost of watering and 12(4.9) 12(4.9) 22(9.1) 135(55.6) 62(25.5) 3.92±0.992
security services

48
4.4.2 Effects of Farm Input Costs on Profitability of Sugarcane Farming

This subsection presents information on the effects of farm input costs on profitability of
sugarcane farming. Most of the farmers (86.4%) acknowledged that the costs of fertilizers
greatly affect the profitability of sugar cane farming. On seedling costs, most of the farmers
(46.5%) equally acknowledged that they also affect profitability of sugarcane farming in a
great way. Other farm input costs stated by the farmers as having a great impact on the
sugar cane farming profitability include; costs of ploughing and preparing land and cost of
labour during planting and weeding. Other farm input costs which most of the farmers
acknowledged having a low impact on sugarcane farming profitability included cost of
labour during harvesting, transportation costs to millers (including loading and offloading
costs), farm equipment costs, agricultural extension services costs, pesticides and
herbicides costs and costs of watering and security.

Arithmetic means along with the rating scale on appendix 3 were used to establish the
general effect of various farm input costs on profitability of sugar cane farming. On the
cost of fertilizers, arithmetic mean of 4.27 indicated that the effect on profitability was
generally high. On the cost of seedlings, arithmetic mean of 3.33 indicated that the effect
on profitability was generally moderate. On the cost of ploughing and preparing land,
arithmetic mean of 3.15 indicated that the effect on profitability was generally moderate.
On the cost of labour during planting, arithmetic mean of 3.28 indicated that the effect on
profitability was generally moderate. On the cost of labour during weeding, arithmetic
mean of 3.09 indicated that the effect on profitability was generally moderate. On the cost
of labour during harvesting, arithmetic mean of 2.91 indicated that the effect on profitability
was generally moderate.

On the cost of transportation to millers, arithmetic mean of 2.88 indicated that the effect on
profitability was generally moderate. On the cost of purchasing farm equipment, arithmetic
mean of 2.70 indicated that the effect on profitability was generally moderate. On the cost
of hiring an agronomist, arithmetic mean of 2.52 indicated that the effect on profitability
was generally moderate. On the cost of pesticides and herbicides, arithmetic mean of 2.66
indicated that the effect on profitability was generally moderate. On the cost of watering
and security services, arithmetic mean of 2.26 indicated that the effect on profitability was
generally low. The composite arithmetic mean of 3.00 indicated that the general effect of

49
farm input costs on profitability of sugar cane farming is moderate. The findings are
provided in Table 4.8 where the abbreviations used were as follows: V.L-Very Low, L-
Low, M-Moderate, G-Great and V.G-Very Great.

Table 4.8: Effects of Input Costs on Profitability of Sugarcane Farming

V.L L M G V.G Mean ±
F (%) F (%) F (%) F (%) F (%) S.D
Extent to which the costs of 6(2.5) 9(3.7) 18(7.4) 91(37.4) 119(49) 4.27±0.931
fertilizers affect profitability
of my sugarcane farming
Extent to which the costs of 21(8.6) 45(18.5) 64(26.3) 59(24.3) 54(22.2) 3.33±1.249
seedlings affect profitability
of my sugarcane farming
Extent to which the cost of 25(10.3) 61(25.1) 57(23.5) 53(21.8) 47(19.3) 3.15±1.280
ploughing and preparing land
affect profitability of my
sugarcane farming
Extent to which the costs of 31(12.8) 38(15.6) 59(24.3) 63(25.9) 52(21.4) 3.28±1.309
labour during planting affect
profitability of my sugarcane
farming
Extent to which the cost of 33(13.6) 54(22.2) 62(25.5) 47(19.3) 47(19.3) 3.09±1.316
labour during weeding affect
profitability of my sugarcane
farming
Extent to which the cost of 42(17.3) 55(22.6) 63(25.9) 48(19.8) 35(14.4) 2.91±1.300
labour during harvesting
affect profitability of my
sugarcane farming
Extent to which 37(15.2) 56(23) 77(31.7) 44(18.1) 29(11.9) 2.88±1.221
transportation costs to millers
( including loading and
offloading) affect
profitability of my sugarcane
farming
Extent to which the cost of 48(19.8) 68(28) 63(25.9) 36(14.8) 28(11.5) 2.70±1.264
purchasing farm equipments
affect profitability of my
sugarcane farming
Extent to which the cost of 61(25.1) 70(28.8) 58(23.9) 32(13.2) 22(9.1) 2.52±1.251
hiring an extension officer
(agronomist) affect
profitability of my sugarcane
farming
Extent to which the cost of 44(18.1) 79(32.5) 60(24.7) 36(14.8) 24(9.9) 2.66±1.217
chemicals (pesticides and
herbicides affect profitability
of sugarcane farming
Extent to which the cost of 71(29.2) 85(35) 53(21.8) 22(9.1) 12(4.9) 2.26±1.121
watering and security
services affect profitability of
my sugarcane farming
Composite Mean = 3.00

50
4.4.3 Regression Analysisof Farm Input Costs and Profitability
Regression analysis was done in order to establish how farm input costs affects the response
variable profitability of sugarcane farming. Table 4.9 shows R-square of 49.8% which
implies that the explanatory variable accounted for 49.8% of the variations in profitability,
while the remaining 50.2% is accounted for by other factors.

Table 4.9: Regression Model Summary of Farm Input Costs and Profitability
R R Square Adjusted R Square Std. Error of the Estimate
0.706 0.498 0.496 0.846

The fitted model was diagnosed and found that the regression model was statistically
significant at 5% level of significance since the P-value of 0.000 is less than 0.05. This
shows that the explanatory variable farm input costs affects the response variable
profitability of sugarcane farming. The findings are provided in Table 4.10.

Table 4.10: ANOVA of Farm Input Costs and Profitability

Model Sum of Degrees of Mean F Sig.
Squares freedom Square
Regression 171.279 1 171.279 239.210 0.000
1 Residual 172.561 241 0.716
Total 343.840 242

The explanatory variable Farm Input Costs was significant due to the fact that its p-value is
less than 0.05. A summary of the coefficients of regression equation are provided in Table
4.11. The fitted regression model therefore became as follows:

P=1.081+0.684FIC

Table 4.11: Coefficients of Regression Equation of Farm Input Costs and Profitability
Unstandardized Standardized T Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) 1.081 0.168 6.453 0.024
FIC 0.684 0.044 0.706 15.466 0.000

51
4.5 Farm Size and Profitability of Sugarcane Framing
This section presents information on the farm size. It focuses on establishing the effect of
farm size on sugar cane farming profitability. Farmers were asked on their farm size under
sugarcane farming, how much they produce per acre and their projections in the coming
harvest with respect to their farm size. Farmers were also asked whether their farm size had
a significant impact on their profitability and if so, to what extent.

4.5.1 Farmers’ Farm Size

This subsection presents information on the farmers’ farm size under sugarcane farming.
From the findings, most of the farmers (18.1%) had five acres under sugarcane farming.
The percentage distribution of farm size under sugarcane farming of other farmers was as
follows, 15.6% of them had four acres under sugarcane farming, 15.2% had less than an
acre under sugarcane farming, 12.3% had planted sugarcane in three acre farms, 6.6% of
them had planted sugarcane in a six acre piece of land, 6.2% of the farmers had seven acre
piece of land under sugarcane farming, 6.2% had planted sugarcane in two acre piece of
land, 5.3% of them had more than ten acres under sugarcane farming while the same
percentage had only one acre under sugarcane farming. From the findings it can be
established that 45.3% of the farmers had at least five acres of land under sugarcane
farming. The findings are provided in Figure 4.11.

Figure 4.11: Farm size under sugarcane farming

52
4.5.2 Standard Produce of Sugarcane per Acre (Tonne)

This subsection presents information on the farmers’ response on the standard produce of
sugarcane per acre. Most of the farmers (39.5%) stated that the standard yield of sugarcane
per acre should be around 44 tonnes if all the cultivation requirements are met. Some
farmers had a different opinion, 19.3% of them stated that the standard yield per acre is
around 45 tonnes when the farm is serviced well, 18.1% of them stated that the standard
yield per acre is approximately 43 tonnes when the farm is well taken care of, 13.6% of
them stated that the standard yield per acre is around 46 tonnes while 9.5% of them stated
that the standard yield per acre is 47 tonnes in a well cultivated farm. The findings are
provided in Figure 4.12.

Figure 4.12: Standard Produce of Sugarcane per Acre (Tonne)

4.5.3 Farmers’ Production per Acre (Tonne)

This subsection presents information on the farmers’ sugarcane production per acre. Most
of the farmers (42.8%) stated that they produce 44 tonnes on average per acre. Production
per acre from other farmers was as follows, 18.1% of them produce 45 tonnes on average
per acre, 9.1% of them averagely produce 46 tonnes per acre while the same percentage
produce 43 tonnes per acre on average, 8.6% of them averagely produce 42 tonnes per acre,
5.3% of them produce 47 tonnes per acre, 4.1% of them produce 48 tonnes per acre, 2.1%

53
of them produce 49 tonnes and 0.8% of the farmers produce 50 tonnes on average per acre.
The findings are provided in Figure 4.13.

Figure 4.13: Farmers’ Production per Acre (Tonne)

4.5.4 Farmers’ Sugarcane Production

This subsection presents information on the farmers’ sugarcane yield per their last harvest,
the projected yield in the next harvest and the average yield per harvest. Most of the farmers
who took part in this study produced around 220 tonnes of sugarcane in their last harvest
with an average yield of 207.05 tonnes. On the projected yield in the next harvest, most
farmers were projecting to harvest around 230 tonnes of sugarcane. On average yield per
harvest, most farmers harvested around 225 tonnes of sugarcane while the average yield
per harvest of the farmers who took part in the study stood at 211.76 tonnes. The findings
are provided in Table 4.12.

Table 4.12: Farmers’ Yield

Mean ± S.D Mode Min Max Range
Yield in the last harvest 207.05±172.08 220 22 1100 1078
Projected yield in the next harvest 216.47±179.90 230 23 1150 1127
Average yield per harvest 211.76±175.99 225 23 1125 1103

54
4.5.5 Farm Size impact on Profitability

This subsection presents information on the farmers’ perception as to whether farm size
has a significant impact on the profitability of sugarcane farming. From the findings, most
of the farmers (81.9%) acknowledged that farm size has a significant impact on the
venture’s profitability while 18.1% of them thought otherwise. Those who denied believed
that, in as much as the farm size had an impact on the profitability of sugarcane farming,
the impact is not that very significant. The findings are provided in Figure 4.14.

Figure 4.14: Farm Size impact on Profitability

The study further sought to establish the extent to which farm size has an impact on the
profitability of sugarcane farming. Only those farmers who had acknowledged that farm
size has a significant impact on the profitability of sugarcane farming were allowed to
respond to this item. Form the findings most of the farmers (50.8%) stated that the extent
was very great, 26.6% of them stated that the extent was great, 11.1% stated that the extent
was moderate. On the other hand, 8.5% of them stated that the extent was low and a further
3% of them stated that the extent was very low. The findings are provided in Figure 4.15.

55
Figure 4.15: Extent to which Farm Size impacts on Profitability

The study further sought to establish whether farm size have a significant effect on the
profitability of sugarcane farming. Chi square test was used to test the hypothesis. Since
the computed chi-square value was greater than its critical value and equally the p-value
was less than its corresponding level of significance we therefore reject the null hypothesis
in favour of the alternative hypothesis. Conclusion can therefore be drawn that, farm size
has a significant effect on the profitability of sugarcane farming. The findings are provided
in Table 4.13.

Table 4.13: Farm Size effect on Profitability of Sugarcane Farming

Test Computed Critical Degrees of P-Value Level of Decision
Value Value Freedom Significance

Chi- 3271.24 527.86 476 0.00 0.05 Reject

square H02

4.5.6 Farmers’ Satisfaction with Farm size under Sugarcane Cultivation

This subsection presents information on the farmers’ satisfaction with the farm size under
which they have cultivated sugarcane in. From the findings most of them (73.7%) were not
satisfied with the farm size in which they have cultivated sugarcane in while 26.3% of them
were satisfied with their farm size. From those who were satisfied, most of them attributed

56
it to the fact that they were still able to acquire significant profits from the size under
sugarcane cultivation. Some attributed it to enjoyment of economies of scale. Some of the
farmers were satisfied with the size because it was easily manageable while some were
satisfied with the size because of low costs of farm inputs required to manage the farm. On
the other hand, for those who were not satisfied with their farm size, majority of them
attributed it to low profits, they believed that if they had significantly larger farms under
sugarcane they would acquire bigger profits. Some farmers attributed their dissatisfaction
with their farm size due to high cost of production, the size was too big for them and it
required a lot of input in terms of cost and time. Some attributed their dissatisfaction with
their farm size due to it not being sustainable. The findings are provided in Figure 4.16.

Figure 4.16: Farmers’ Satisfaction with Farm size under Sugarcane Cultivation

4.5.7 Intention to increase Farm Size.

This subsection presents information on the farmers’ intention to increase their farm size
in future. From the findings, most of the farmers (86.8%) acknowledged having intentions
of increasing their farm size while 13.2% of them had no such intentions. For those who
intended to increase their farm size, the main driving force for most of them was to increase
on their profits. They believed that when they increase their farm size their profits will
equally increase significantly. They believed it will make them enjoy economies of scale.
On the other hand, for those who never had intentions of increasing their farm size, they
attributed their reasons to factors like continuous increase of farm land prices, rapid decline

57
of profitability of sugarcane farming and focus on establishing other income generating
activities among others. The findings are provided in Figure 4.17.

Figure 4.17: Intention to increase Farm Size.

4.5.8 Farm Size increment and Profitability

This subsection presents information on the farmers’ thoughts on whether increase in their
farm size will lead to significant increase in profitability of their sugar cane farming. From
the findings, most of them (79.8%) believed that it will automatically lead to increase in
profits while 20.2% of them thought otherwise. The findings are provided in Figure 4.18.

Figure 4.18: Farm Size increment and Profitability

4.5.10 Regression Analysis of Farm size and Profitability
58
Regression analysis was done in order to establish how farm size/scale affects the response
variable profitability of sugarcane farming. Table 4.14 shows R-square of 45.8% which
implies that the explanatory variable accounted for 45.8% of the variations in profitability,
while the remaining 54.2% is accounted for by other factors.

Table 4.14: Regression Model Summary of Farm size and Profitability

R R Square Adjusted R Square Std. Error of the Estimate

0.677 0.458 0.456 0.879

The fitted model was diagnosed and found that the regression model was statistically
significant at 5% level of significance since the P-value of 0.000 is less than 0.05. This
shows that the explanatory variable farm size/scale affects the response variable
profitability of sugarcane farming. The findings are provided in Table 4.15.

Table 4.15: ANOVA of Farm size and Profitability

Model Sum of Degrees of Mean F Sig.

Squares freedom Square
Regression 157.604 1 157.604 203.947 0.000
1 Residual 186.236 241 0.773
Total 343.840 242

The explanatory variable Farm Size was significant due to the fact that its p-value is less
than 0.05. A summary of the coefficients of regression equation are provided in Table 4.16.
The fitted regression model therefore became as follows:

P=1.012+0.308FS

Table 4.16: Coefficients of Regression Equation of Farm size and Profitability of Farm
size and Profitability
Unstandardized Standardized T Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) 1.012 0.185 5.463 0.000
FS 0.308 0.022 0.677 14.281 0.000

59
4.6 Chapter Summary
The chapter has analyzed respondents’ responses from the field. Data was analyzed based
on the research questions and presented in form of tables and figures. The next chapter,
which is chapter five presents summary, discussion, conclusions and recommendations of
the study.

60
 CHAPTER FIVE

5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction
This chapter starts by discussing summary of the study. The findings are discussed based
on the research questions. Literature review was used to support the findings of the study.
Conclusion, recommendation and areas for further studies are also presented in this chapter.

5.2 Summary
The purpose of the study was to assess the factors affecting profitability of sugar cane
farming among sugarcane farmers in Malava Sub County in Kakamega County. The study
was guided by the following research questions: What is the effect of sugarcane factory
pricing on sugar cane farming profitability among sugar cane farmers; What is the effect of
farm input costs on sugar cane profitability among sugar cane farmers and What is the
effect of farm size/scale of farming (output/units produced) on sugar cane farming
profitability among sugar cane farmers.

Descriptive research design was adopted for the study. Target population comprised of the
643 sugar cane farmers and agricultural extension officers in Malava Sub County in
Kakamega County. The study used stratified random sampling technique to select 247
respondents into the sample where 243 of them were farmers’ representatives and 4 of them
were agricultural extension officers. Structured questionnaires were used to collect primary
data. Data was analyzed both quantitatively and qualitatively. Descriptive statistics such as
the frequencies, percentages, means and standard deviations were obtained using Statistical
Package for Social Sciences (SPSS) version 22. Regression analysis for each variable was
also carried out in the study.

The first research question was on the effect of sugarcane factory pricing on the profitability
of sugar cane farming. From the findings, most of the farmers (92.6%) were not satisfied
with the millers’ prices. Most farmers (94.7%) stated that the millers’ prices were neither
fair nor reasonable. Most of them also stated that the prices provided by the millers did not
effectively cater for the cost of production and cost of transportation of sugarcane to

61
collection points or to the millers as shown by a percentage distribution of 83.9% and 91.8%
respectively. Most of the farmers (90.9%) also said that the prices had less consideration
on market demand in the sense that, even when the sugar prices increase the millers rarely
revised their cane buying prices upwards. During price adjustments by millers, most of the
farmers (88.5%) stated that their representatives are neither informed nor consulted before
any adjustments are initiated. On stability of the prices, most of the farmers (72.8%) pointed
out that the millers’ prices keep on fluctuating just to favor them. Most of the farmers
(51.6%) acknowledged that the extent to which millers’ prices had negatively impacted on
their profitability was very great. Hypothesis test also established that there was significant
effect of millers’ prices on the profitability of sugarcane farming.

The second research question was on the effect of farm input costs on the profitability of
sugar cane farming. From the findings, most farmers (86.4%) acknowledged that the costs
of fertilizers greatly affected the profitability of sugar cane farming. Other farm input costs
which most of the farmers indicated as having a great impact on the profitability of their
sugar cane farming profitability include; seedling costs, costs of ploughing and preparing
land and cost of labour during planting and weeding. Most of the farmers indicated the farm
input costs which had a low impact on the profitability of their sugarcane farming included
cost of labour during harvesting, transportation costs to millers, farm equipment costs,
agricultural extension services costs, pesticides and herbicides costs and costs of watering
and security. Using the arithmetic mean and the rating scale in appendix 3, it was
established that the effect of fertilizer cost on profitability was generally high. The findings
also indicated that effect of seedling costs, ploughing and land preparation costs, labour
cost during planting, weeding and harvesting, the cost of transportation to millers, the cost
of purchasing farm equipment and the costs of pesticides and herbicides on profitability
was generally moderate as indicated by their respective arithmetic means. The findings
equally indicated that effect of watering and security services costs on profitability of
sugarcane farming was generally low as indicated by their respective arithmetic means.

The third research question was the effect of farm size on the profitability of sugar cane
farming. The findings established that 45% of the farmers had at least five acres of land
under sugarcane farming. Most of the farmers (81.9%) acknowledged that farm size has a
significant impact on the profitability of sugarcane farming. The findings also established
62
that most farmers (86.8%) had intentions to increase their farm size under sugarcane
farming due to the anticipation that they will realize more profits when they do so. On the
extent to which the farm size can impact on profitability of sugarcane farming, most of the
farmers (50.8%) established that the extent was very great. Hypothesis test also established
that there was significant effect of farm size on the profitability of sugarcane farming. Most
of the farmers (79.8%) believed that when they increase their farm size it will lead to
significant increase in profits due to more sales as a result of more produce.

5.3 Discussion
5.3.1 Factory Pricing on Sugar Cane Farming and Profitability among Sugar Cane
Farmers
From the study, most of the farmers were not satisfied with the millers’ prices as it had a
significant impact on the profitability of sugarcane farming. Most of them asserted that the
millers’ prices were neither fair nor reasonable and did not cater for most of their expenses
hence significantly affecting on their profitability. In an almost similar study by Sawney
(2016) who did a research on profitability of sugarcane farming stated that pricing is one
of the key and sensitive factors determining the profitability of sugarcane farming. He
argued that millers should set up clear sugar cane pricing policies that will guide them on
determination of prices that will be fair to both the growers and them. These prices should
be such that they will ensure adequate returns to the industry and out growers and ensuring
supply of sugar to consumers at fair prices hence contributing to the sustainability of the
industry. He stressed that if the prices set by millers are unfair to the out growers, most of
them are likely to withdraw their services due to unsustainability of the venture putting
millers at risk of losing out on the supply of sugarcane.

Most of the farmers stated that the prices provided by the millers were unsatisfactory. From
the findings of the study it was established that prices provided by the millers did not
effectively cater for the cost of production and cost of transportation of sugarcane to
collection points or to the millers hence impacting on their profitability. This shows how
significant millers’ prices are on farmers’ productivity and profitability. In comparison with
the study by Ruth (2019) on millers’ prices in western regions of Kenya, she established
that sugarcane farmers in the western regions of Kenya have suffered from unfair prices
imposed by millers on them. In her study she established that most farmers complained on

63
the reduced pay and never factored in on the fact that the costs of input were always on the
rise. Ruth (2019) argued that most millers should put into consideration farm input costs,
transport and gate cutting charges when determining their prices to the out growers since
these costs have always remained high making the farmers to be the losers all the time. In
her findings most farmers aired their frustrations on the millers’ prices stressing that
whatever they receive doesn’t cater for the cost of production and transportation. She
recommended that millers should be in consultations with the out growers on price
determination in order to keep farmers in the venture for continued supply of sugarcane,
which is the main raw material for sugarcane production.

The study established that millers’ prices had less consideration on market demand in the
sense that, even when the sugar prices increase the millers rarely revised their cane buying
prices upwards. In comparison with the findings of Maurice (2019) who did a research on
the millers’ prices in relation to the market trends on the demand and supply of sugar, he
stated that most millers have the tendency of only revising sugarcane prices downwards
when demand falls but not upwards even when there is great demand for sugarcane. These
findings were similar with the findings of this research, in that most farmers also claimed
that millers were reluctant in revising their prices upwards when the demand for sugar
escalates. According to Maurice (2019) sugarcane farmers across the country want sugar
companies to pay them more following an increase in the price of sugar when sugar is
retailing at high prices, it means millers are making profits and suppliers of the raw material
should equally benefit.

On stability of the prices, the study established that millers’ prices keep on fluctuating just
to favor them. According to Maurice (2019) most millers ignore the set pricing by the sugar
committee and thus set their own prices. The above factors generally affect the pricing of
sugarcane and thus the general bottom-line or rather profitability of the farmers. According
to Jackline (2018), the government should crack the whip on sugar factories that have the
tendency of revising cane prices downwards. Jackline (2018) stressed that it was wrong for
millers to assume powers of Cane Pricing Committee, which is the body solely mandated
to determine prices. She further recommended that those millers who are found to have
violated the recommended prices by the Cane Pricing Committee should have their licenses
withdrawn or pay huge penalties.

64
Most of the farmers acknowledged that the extent to which millers’ prices had negatively
impacted on their profitability was very great. According to Ruth (2019) for both the millers
and the farmers to acquire some significant profits from sugarcane farming, the law of
supply and must be obeyed. Ruth (2019) stated that if the supply of sugarcane is low the
pricing should be high as the farmers would tend to go sell to the millers who offer the best
price. Ruth (2019) also stated that when there is oversupply of sugarcane then inherently
the pricing of cane should be lower as millers would have a large supplier’s base. If the
farmers are also paid better for their cane, they will tend to invest more on sugarcane
farming hence increase the productivity and area of farming hence guarantying millers with
steady raw material supply.

5.3.2 Farm Input Costs and Sugar Cane Profitability among Sugar Cane Farmers
From the study, most farmers acknowledged that the costs of fertilizers greatly affected the
profitability of sugar cane farming. This concurred with the findings of Nazir, Jariko and
Junejo (2013) who found that the out growers returns were minimized by deduction
concerning the costs of inputs of sugarcane including, DAP, urea, land preparation, farm
yard manure, seed and its application, cost of irrigation and weeding practices. They also
found that sugarcane production is faced by problems of high-priced inputs, low-priced
output, setbacks in payments and insufficient scientific knowledge. The high amount of
inputs for the sugarcane crop is because it has a prolonged duration nature and also the
sugarcane production cost has displayed a rising trend being witnessed over the years.
These findings were similar to the findings of Azam and Khan (2010) who did a research
on the inputs which significantly affect the profitability of sugarcane farming in Asia. They
also established that sugarcane productivity is greatly affected by fertilizer costs. They
recommended that sugarcane farmers should shift from inorganic types of fertilizes and
focus more on the organic ones since they are cheaper.

Other farm input costs with a great impact on the sugar cane farming profitability include;
seedling costs, costs of ploughing and preparing land and cost of labour during planting
and weeding. These findings were in line with the findings of Kamruzzaman &
Hasanuzzaman (2007) who researched on the components influencing the profitability of
production of sugarcane. They stated that labour cost, frequency of applications frequency
of fertilizer, cost of urea, and the cost of seed cane were identified as the main determinants
impacting the sugarcane production profitability. They further said that sugarcane farming
65
being a labour intensive crop farmer is needed to lessen per acre labour, fertilizer applied
and the cost of seed to increase profit margin. The manner in which to cut labour cost is by
introducing of new technology employed for weeding, planting, and harvesting. The study
findings were also in line with the findings of Narayan (2004) who estimated a sugarcane
production model of sugarcane production in Fiji and found that the area harvested and
fertilizer, labour force and prices paid to sugarcane farmers had positive influence on
sugarcane productivity and profitability in both the short- and long-run. The findings were
also similar to the findings of Hussain and Khattak (2008) who did a research on the
economics of sugarcane production and found that the area under sugarcane, total fertilizer
used, human labour and total seed cane used were the main factors affecting sugarcane
production.

The findings on the great impact of seedling costs, costs of ploughing and preparing land
and cost of labour during planting and weeding cost as established by this study also
concurred with the findings of Harb and Columba (2010) who pinpointed weed control,
fertilizer, soil sampling, re-planting with treated seed cane, as well as the usage of
herbicides as crucial factors in the production of above-average sugarcane yields. In
addition to that, they also emphasized on harvesting operation to maximize profitability.
On the same area of research, Malaza and Myeni (2009) also identified seedling, fertilizer
and land preparation costs as the main costs that have a significant impact on the
profitability of sugarcane farming. They stated that they are the key elements to be managed
for efficient production of sugarcane. They stated that these are the key items which need
not to be compromised and should be effectively managed cost wise and quality wise i.e.
right varieties for the climate and soils need to be grown, right quantities of fertilizers need
to be applied and land has to be prepared taking into consideration the method of irrigation
to be used which should facilitate proper water movements.

From the study, farm input costs which had a low impact on sugarcane farming profitability
included cost of labour during harvesting, transportation costs to millers, farm equipments
costs, agricultural extension services costs, pesticides and herbicides costs and costs of
watering and security. These findings contradicted with the findings of Katungi, Wozemba
&Rubyogo (2011) who stated that harvesting and post-harvest approach set up the biggest
cost item accounting for 72% of the overall variable costs. They stated that the labor

66
shortfall is more worsen by up surging rural wages which leads to a rise in the agricultural
cost of production and has eroded profit margins for a good number of farmers. Katungi,
Wozemba &Rubyogo (2011) also stated that post-harvesting costs such as transport cost
has an impact on farmer’s returns. They said that the distance to the mill has adversely
impacted production performance and the general profitability of the venture. Distance
covered determines the transportation bill, the longer the distance the higher the cost. These
findings contradicted the findings of Hussain and Khattak (2008) who established that the
pesticides and herbicides costs were also one of the major inputs affecting the profitability
of sugarcane farming.

5.3.3 Farm Size/Scale of farming and Sugar Cane Farming Profitability among Sugar
Cane Farmers

Most farmers acknowledged that farm size had a significant impact on the profitability of
sugarcane farming. These findings were in line with the findings of Mbuyazwe and
Barnabas (2012) who studied the relationship between the size of the farm and the amount
of cane harvested in Swaziland came into conclusions that generally large-scale sugarcane
farmers got the greatest level of yields as compared to both the medium scale farmers and
small-scale farmers. They were also in line with the findings of Ogwang (2009) who did a
research on the factors affecting the profitability of sugarcane farming. In his study Ogwang
(2009) indicated that one of the major factors that contributed to profitability of sugarcane
farming was farm size. In his findings he established that those sugarcane farmers with
larger farm size were getting bigger positive gross margins from their sugarcane enterprise
as compared to the ones with smaller farms. He concluded that sugarcane acreage (farm
size) had a statistically significant contribution to profitability of sugarcane farming. These
findings were also echoed by the findings of Baiyegunhi and Arnold (2011) who
investigated the economics of sugarcane production whereby they focused on establishing
the link between profitability of sugarcane farming and farm size. Their findings
established that when all procedures are effectively observed there is a positive association
between profitability of sugarcane farming and farm size. This implied that bigger farm
sizes attract more profit when well tilled.

67
These findings contradicted with the findings of Wickramaarachchi & Weerahewa (2018)
who did a study finding of the relationship between land size and output, their results
presented mixed outcomes concerning the inverse relationship between size of the land and
output. They noted that although the relationship between plot size and the productivity of
land was without any doubt good, an inverse relationship between both farm size and
productivity of land was notable as land size heightened above a certain limit.
Wickramaarachchi & Weerahewa (2018) stated that small-scale sugarcane growers, thus,
may exclusively operate small-scale farming in the provision that they own the exemplary
skills to make sure that the kind of relationship involving both cultivated farmland and
output is actually taken care of through applications of the right amount of inputs which
are particularly looked at per the size of their farms. Merce, Merce & Pocol, (2016) also
concurred by arguing that, even though farm size is an essential condition for the
accomplishment concerning economic performance, it’s insufficient. Merce, Merce &
Pocol (2016) stated that, it has been widely observed that there exist a negative relationship
involving farm size and productivity, an increase of farm size leads to a decrease of farm
productivity and in this case smaller farms are more productive than large ones. Emana &
Gebremedhin (2007) had a different opinion and noted that the association amongst the
farm size and crop output (tonnes per ha) may not be pre-determined. Consequently, in
regards to a positive or even a negative correlation among the cultivated farm size as well
as the sugarcane production by small scale farmers should be expected.

On the extent to which the farm size can impact on profitability of sugarcane farming, it
was established that the extent was very great. These findings contradict the findings of
Jayne et al. (2016) who stated that farm size is not regarded as the main factor of
productivity. They argued that small scale farmers acquire productivity level per unit area
of land equal to or higher in comparison to those accomplished by large-scale farmers in
whatever place in the world and we all know that high productivity is directly proportional
to profitability. The Chi-Square test established that there was significant effect of farm
size on the profitability of sugarcane farming. Jayne et al. (2016) stated that the literature
on the inverse farm size-productivity relationship has commonly recognized that
productivity of small farms is much greater as compared to the larger farms. A good number
of these studies are based on data in whose scope ranges between zero and five hectares.
Farm size distributions is rapidly changing in parts of Sub-Saharan Africa where “Medium-

68
scale” farm landholdings of between five to 100 hectares recently is accountable for a
considerable and thriving share of African farmland in a lot of nations.

Most farmers believed that when they increase their farm size it will lead to significant
increase in profits due to more sales as a result of more produce hence boosting the
profitability of their sugar cane farming. Lamb (2003) observes that small farms could
acquire greater yields as compared to larger farms as a result of further intensive usage of
labor, yet the output level is relatively lower due to deductions of the labor cost. Study
findings looking at the relationship amongst farm size and profits have typically either
reversed the inverse relationship or to some extent even weakened it.

5.4 Conclusion
5.4.1 Sugarcane Factory Pricing and Sugar Cane Farming Profitability among Sugar
Cane Farmers
Most of the farmers were not satisfied with the millers’ prices as it had a significant impact
on the profitability of sugarcane farming. Most farmers regarded the millers’ prices as
unfair and unreasonable. Most farmers acknowledged that prices provided by the millers
did not effectively cater for the cost of production and cost of transportation of sugarcane
to collection points or to the millers. There is significant effect of millers’ prices on the
profitability of sugarcane farming. The arithmetic mean established that extent to which
millers’ prices had negatively impacted on their profitability was very great.

5.4.2 Farm Input Costs on Sugar Cane Profitability among Sugar Cane Farmers
The arithmetic mean indicated that effect of fertilizer cost on profitability was generally
high. The arithmetic mean also established effect of seedling costs, ploughing and land
preparation costs, labour cost during planting, weeding and harvesting, the cost of
transportation to millers, the cost of purchasing farm equipments and the costs of pesticides
and herbicides on profitability was generally moderate. The mean also established the effect
of watering and security services costs on profitability of sugarcane farming was generally
low.
5.4.3Farm Size and Sugar Cane Farming Profitability among Sugar Cane Farmers
Most farmers acknowledged that farm size has a significant impact on the profitability of
sugarcane farming. Most farmers established that the extent to which the farm size impact
69
on profitability of sugarcane farming was very great. The test carried established there is a
significant effect of farm size on the profitability of sugarcane farming. Most farmers
believed that when they increase their farm size it will lead to significant increase in profits
due to more sales.

5.5 Recommendations
5.5.1 Recommendations for Improvement
5.5.1.1Sugarcane Factory Pricing and Sugar Cane Farming Profitability

Millers should bring on board farmers representatives for consultations before revising of
sugarcane prices so that the prices can be uniformly accepted by both parties. Government
bodies mandated to control sugarcane prices should be empowered so that they can be able
to protect farmers form millers who are out to exploit them as this will ensure that the
farmers also get profits from their sugarcane farming venture. Tough penalties like
operational license withdrawal or suspension should be placed on millers who go against
the recommended prices by the determining committees.

5.5.1.2Farm Input Costs and Sugar Cane Profitability

Farmers should be trained on how to adopt modern ways of farming and embracing
technology which will assist them in reduction of production cost while at the same time
maximizing on the yield. Farmers should engage agronomists who will guide them on
which farm inputs to use and how to use them in order to maximize on the yield and acquire
more profits. The farmers should be sensitized on using organic fertilizers as they are
cheaper and have the capacity to improve on the yield too.

5.5.1.3Farm Size/Scale of Farming and Sugar Cane Farming Profitability

Farmers are advised to not only focus on increasing of their farm size but rather focus on
improvement of their production skills. This is because, improvement in production skills
is more likely to result in more yield hence more profits while just increase in size without
improvement in skills will subject a farmer to more input costs and possibly more losses
due to insufficient skills in running larger farms.

70
5.5.2 Recommendations for Further Research
This study focused on the effects of millers’ prices, farm input costs and farm size on
profitability of sugarcane farming. A research can be conducted to determine strategies
which farmers can apply to maximize on the yield with the available resources.

71
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 APENDICES
Appendix1: Questionnaire for Farmers
Dear respondent,
In order for the government and all stakeholders involved to improve the welfare of
farmers, we are requesting a few of your minutes to respond to some questions. Your
comments will enable us see what we can do in order to improve the welfare of sugar cane
farmers. The information provided therein will be confidential as the status of response will
be anonymous.
Instructions: Tick where applicable

SECTION A: GENERAL INFROMATION

1. Gender of the respondent
1) Male
2) Female
2. Highest academic qualification attained
1) None
2) Primary education
3) Secondary education
4) Certificate
5) Diploma
6) Bachelors’ degree
7) Masters’ degree
8) PhD
9) Others (Specify…………………………………………..)
3. Age of the respondent
1) Less than 20 years
2) 21-35 years
3) 36-50 years
4) Above 50 years
4. Years of experience in sugarcane farming……………..(years)
5. Other sources of income other than sugarcane farming
1) Formal employment
2) Informal employment
3) Farming (other crops)
4) Others (Specify………………………………………)

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 SECTION B: PROFITABILITY OF SUGARCANE FARMING
Please state the extent to which you agree with the following statements regarding
profitability of your sugarcane farming. (Where S.D-Strongly Disagree, D-Disagree, N.S-
Not Sure, A-Agree, S.A-Strongly Agree)
S.D D N.S A S.A
Proceeds from the sales from my sugarcane farm
comfortably recovers all fertilizer costs with
1. significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all seedlings costs with
2. significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all ploughing and land
3. preparation costs with significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all planting costs with
4. significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all weeding costs with
5. significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all harvesting costs with
6. significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all transportation costs to
millers (including loading and offloading costs)
7. with significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all farm equipments costs
8. with significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all costs for hiring an
extension officer (agronomist) with significant
9. profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all chemical costs (pesticides
10. and herbicides) with significant profits
Proceeds from the sales from my sugarcane farm
comfortably recovers all watering and security
11. services costs with significant profits

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 SECTION C: SUGARCANE FACTORY PRICING
1. Are you satisfied with the pricing of sugarcane by the millers?
1) Yes
2) No
If yes, to what extent has it positively impacted on your profitability?
1) Very Great extent
2) Great extent
3) Moderate extent
4) Low extent
5) Very Low extent
If no, to what extent has it negatively impacted on your profitability?
1) Very Great extent
2) Great extent
3) Moderate extent
4) Low extent
5) Very Low extent
2. What are the current millers’ prices? ……………………......................
3. What is the estimated cost of production per acre? ................................
4. To what extent do you agree with the following statements on sugarcane pricing by
millers. (Where S.D-Strongly Disagree, D-Disagree, N.S-Not Sure, A-Agree, S.A-
Strongly Agree)

S.D D N.S A S.A

1. Prices are very fair and reasonable

2. Prices consider farmers’ cost of production
3. Prices consider farmers’ cost of transportation
Prices consider market demand i.e. they are revised
4. upwards when sugar prices increase
Prices adjustments are done after consultations
5. with farmers representatives
6. The prices are stable i.e. they rarely fluctuate
The prices agreed are honored and paid in time to
7. farmers upon delivery

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 SECTION D: FARM INPUT COSTS
1. To what extent do the following farm input costs affect the profitability of your
sugarcane farming (Where V.G-Very Great, G-Great, M-Moderate, L-Low, V.L-Very
Low)
V.L L M G V.G
Extent to which the costs of fertilizers affect
1. profitability of my sugarcane farming
Extent to which the costs of seedlings affect
2. profitability of my sugarcane farming
Extent to which the cost of ploughing and preparing
3. land affect profitability of my sugarcane farming
Extent to which the costs of labor during planting
4. affect profitability of my sugarcane farming
Extent to which the cost of labor during weeding
5. affect profitability of my sugarcane farming
Extent to which the cost of labor during harvesting
6. affect profitability of my sugarcane farming
Extent to which transportation costs to millers (
including loading and offloading) affect profitability
7. of my sugarcane farming
Extent to which the cost of purchasing farm
equipments affect profitability of my sugarcane
8. farming
Extent to which the cost of hiring an extension
officer (agronomist) affect profitability of my
9. sugarcane farming
Extent to which the cost of chemicals (pesticides and
10. herbicides affect profitability of sugarcane farming
Extent to which the cost of watering and security
11. services affect profitability of my sugarcane farming

2. Please rate the costs of the following farm inputs in sugarcane farming(Where V.H-
Very High, H-High, M-Moderate, L-Low, V.L-Very Low)
V.H H M L V.L
1. The costs of fertilizers
2. The costs of seedlings
3. The cost of ploughing and preparing land
4. The costs of labor during planting
5. The cost of labor during weeding
6. The cost of labor during harvesting
The cost of transportation to millers( including
7. loading and offloading)
8. The cost of purchasing farm equipments
The cost of hiring an extension officer
9. (agronomist)
10. The cost of chemicals (pesticides and herbicides

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11. The cost of watering and security services

SECTION E: FARM SIZE

1. What is the farm size in acres under sugarcane farming?..........................Acres

2. What is the standard produce of sugarcane per acre? ..........................kilograms
3. How much do you produce per acre (kilograms)?.................................kilograms
4. How much did you produce in your last harvest?.................................kilograms
5. How much are you projecting in the coming harvest?..........................kilograms
6. On average how much do you produce annually?.................................kilograms
7. Do you believe your sugarcane farm size has a significant impact its profitability?
1) Yes
2) No
If yes, to what extent
1) Very Great extent
2) Great extent
3) Moderate extent
4) Low extent
5) Very Low extend
8. Are you satisfied with the size of land you are cultivating sugarcane on?
1) Yes
2) No
If yes why
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
.………………………………………………..…………………………………….
If no why
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
……………………………………………………….……………………………..
9. Do you intend to increase the size of the land in future?
1) Yes
2) No
Reason
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 ………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
10. Do you believe increase in cultivation land will have a significant increase in the
profitability of your sugarcane farming? (Factoring in increase in production cost)
1) Yes
2) No

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Appendix 2: Questionnaire for Agricultural Extension Officers
Dear respondent,

In order for the government and all stakeholders involved to improve the welfare of
farmers, we are requesting a few of your minutes to respond to some questions. Your
comments will enable us see what we can do in order to improve the welfare of sugar cane
farmers. The information provided therein will be confidential as the status of response will
be anonymous.

Instructions: Tick where applicable

What is your level of agreement with the following statements? (Where S.D-Strongly
Disagree, D-Disagree, N.S-Not Sure, A-Agree, S.A-Strongly Agree)

Statements S.D D N.S A S.A

1. We invest in increasing knowledge, motivation, and
synergy with the farmers.
2. We do capacity building for the farmers.
3. We handle farmers complaints to the best of our
ability
4. We routinely carry out satisfaction assessments
from the farmers
5. There is a lot of support for farmers in terms of
improved cultivation technologies
6. Farmers are strongly encouraged increase their size
of land
7. We collect, analyze, and share information farmers
with related stakeholders to improve their welfare.
8. We nurture a culture of open communication
between farmers and the millers
9. Millers usually compensate the farmers fairly for
the sugar cane
10. We provide tools and training necessary for work

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11. Millers have a keen interest in improving the
welfare of the farmers.
12. Farmers prefer sugar cane farming to other crops
13. There has been a steady increase of farmers who
prefer sugar cane farming
14. Many farmers incur more cots because of their
smaller land size
15. Millers usually pay the farmers on time.

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Appendix 3: Rating Scale
Level Rating Mean (5-Item likert Scale)
Very Low 1-1.4
Low 1.5-2.4
MILLERS’ PRICES Moderate 2.5-3.4
High 3.5-4.4
Very High 4.5-5.0
Very High 1-1.4
High 1.5-2.4
FARM INPUT COSTS Moderate 2.5-3.4
Low 3.5-4.4
Very Low 4.5-5.0
Very Low 1-1.4
EFFECTS OF FARM Low 1.5-2.4
INPUT COSTS ON Moderate 2.5-3.4
PROFITABILITY High 3.5-4.4
Very High 4.5-5.0
Very Low 1-1.4
Low 1.5-2.4
PROFITABILITY OF Moderate 2.5-3.4
SUGARCANE High 3.5-4.4
FARMING Very High 4.5-5.0

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Appendix 4: Sugar Cane Producing Countries
Production Area Yield
Country Million Mg Rank ×1000 ha Rank Mg ha−1 Rank
Brazil 739.27 1 9835.2 1 75.17 29
India 341.20 2 5060.0 2 67.43 40
China 126.14 3 1827.3 3 69.03 39
Thailand 100.10 4 1321.6 4 75.74 26
Pakistan 63.75 5 1128.8 5 56.48 51
Mexico 61.18 6 782.8 6 78.16 25
Colombia 34.88 7 405.7 9 85.95 19
Indonesia 33.70 8 450.0 7 74.89 31
Philippines 32.00 9 435.4 8 73.49 37
USA 27.91 10 368.6 11 75.71 27
World total 2165.23 26522.7 81.64

Slope
Maximum (Mg Minimum (Mg Mean (Mg ha−1
Country ha−1) ha−1) (Mg ha−1) CV (%) yr−1) r2
Brazil 80.26 46.48 64.92 14.33 0.75 0.93
India 76.53 49.11 62.41 11.48 0.49 0.68
China 74.93 39.18 59.16 15.98 0.67 0.73
Thailand 76.20 30.14 53.93 20.42 0.70 0.58
Pakistan 57.23 31.57 44.19 15.48 0.50 0.76
Mexico 78.16 62.68 71.11 6.00 0.22 0.40
Colombia 101.81 57.23 84.87 10.68 0.45 0.36
Indonesia 149.02 55.17 84.08 26.57 −1.60 0.73
Philippines 96.52 58.59 74.27 11.94 0.25 0.12
USA 89.98 69.90 78.99 5.71 −0.14 0.14
World total 71.77 53.76 62.49 8.68 0.45 0.95

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Appendix 5: NACOSTI Letter

89