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In East Africa, and specifically in Kenya (where this study would be based) small-holder livestock production systems, in which farmers grow crops and keep a small diversity of a small number of domestic livestock, are moving from a subsistence model, where farmers grow produce for home consumption, to one of increased commercialisation, intensification and consumer focus (Pretty et al 2011), where the livestock and crops are also grown for commercial gain. Simultaneously, a greater proportion of Africa’s population is urbanised, making market-oriented farming more important for food security. This change requires farmers to engage with new value chains for both inputs and outputs. Shifting from a subsistence system to one in which the market dominates represents a huge financial risk for poor farmers: it requires investment (eg in more farm inputs, in a labour force, in improved breeds of livestock, in transport) and access to more complex financial products (eg loans and credit). The returns are uncertain, due to market volatility, poorly developed value chains (especially for livestock and animal source foods) and increased exposure to infectious disease problems (improved livestock breeds may be more susceptible to endemic infections). Despite these risks, such changes are clearly happening throughout Kenya and elsewhere in Africa, because success can reap great financial rewards.
Understanding the motivations behind this risk taking, and the impact it has on the family, how long it takes to generate a return and what sacrifices are made in pursuit of this profit, is a highly relevant objective. Understanding the changes at an individual farm level would allow extrapolation to understanding these changes on a larger scale, and inform the advice that several intermediaries (NGOs, government, private sector institutions, etc.) give to farmers and policy implementers. In addition, understanding farmers’ financial decisions can help financial institutions and those who support them to offer tailored, context specific financial products. Kenya has an impressive history of innovation in the financial services sector, targeting low-income households (eg Mpesa, MShwari, etc).
We are currently implementing a project under the ZELS initiative (Zoonoses in Emerging Livestock Systems), funded by the BBSRC, DFID, ESRC, MRC, NERC and DSTL, which is exploring several aspects of agricultural change in western Kenya. It provides us with an excellent opportunity to link our existing studies of value chain economics, animal genetics and pathogen surveillance to financial and socio-economic issues of risk-taking in farming. Our industrial partner, the Financial Sector Development Programme (FSD) - http://www.fsdafrica.org - has previously implemented the Kenya Financial Diary Project (http://fsdkenya.org/financial-diaries) which tracked the cash flows of 298 low-income Kenyan households over a period of one year. The diaries, which were designed to capture data across all sectors, and therefore included a relatively small number of livestock farmers in transition, provide an excellent methodology to understand farm-based economics
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