Influence Of Contract Fixed Prices On The Financial Performance Of French Beans Farmers In Kirinyaga County

Abstract

In the recent past, contract farming has been on the rise. This is because farmers have the fear of the unknown and somehow want to be certain about their future returns. Contract farming therefore, has become the preference for many farmers. Many studies have emerged in regard to this field with little focus on the influence of contract fixed prices on the performance of French Beans farmers in Kirinyaga County. This study was carried out in Kirinyaga County in Kenya. The first objective of the study was to establish the effects of training on the financial performance of French beans farmers in Kirinyaga County. The second objective was to determine the effects of contract transaction costs on the financial performance of French beans farmers in Kirinyaga County. Third was to determine the effects of regulatory framework on the financial performance of French beans farmers in Kirinyaga County. Finally, the fourth objective was to find out the effects technical assistance on the financial performance of French beans farmers in Kirinyaga County. The study used a descriptive design and the target population was a total of 635 French beans farmers who are in contract farming arrangement. Yamane formula was used to determine the sample size. Using the Yamane formula therefore, 245 farmers were used as a sample. Primary data was collected by self-administering of questionnaires by the research assistant. The questions incorporated both open and closed ended questions. The reliability of the research instrument was determined by the use of Cronbach coefficient. Data was collected with the help of a research assistant. Data analysis was done by the use of stata software. The goodness of fit was determined by use of diagnostic test on randomness of errors heteroscedasticity, normality, multi-collinearity and the test for outliers. Mean, Standard deviation, and Regression analysis were calculated. The data collected was analyzed by use of percentages and frequencies and data was presented in form of graphs, tables, charts and figures so as to establish the relationship between the dependent and the independent variables. The dependent variable was the financial performance of French beans farmers whereas the independent variables are; training, transaction costs, regulatory framework and technical assistance. The study found that training French beans farmers on health and hygiene, safety standards such as International Food Safety Standards, proper harvesting and post harvesting produce handling techniques, pest and disease control including chemical use and handling and farm records improve financial performance of French bean farmers in Kirinyaga County. The study also established that technical assistance through proving farmers with seeds, chemicals, seeds, spraying services and credit facility improves financial performance of French bean farmers in Kirinyaga County. The study depicted that training and technical assistance were statistically significant in explaining variation in financial performance of French bean farmers in Kirinyaga County. Transaction cost and regulatory framework awareness were not statistically significant in explaining the variation of financial performance of farmers in Kirinyaga County. Therefore, the study concluded that increased training and technical assistance to farmers increase their financial performance. The study recommended that French beans farmers engaged in fixed price contracts should be trained in addition to being given technical assistance so as to increase their financial performance.