Farm household allocative efficiency : a multi-dimensional perspective on labour use in Western Kenya.

Labour is an important resource for smallholder households. In this study, efficiency in labour use is examined from three perspectives that are relevant in smallholder farm households of western Kenya. A horizontal perspective was adopted in evaluating labour use efficiency within the farm. Outcomes of household behaviour in allocation of labour to various crops were examined while controlling for variability in bio-physical characteristics of the farm. The study revealed that efficiency in labour allocation within the farm can be improved and that mobility of labour is mainly inhibited by poor output markets.

The strong seasonality in agricultural production results in variability in the labour constraint over a cropping season. A vertical perspective to labour use on the farm was therefore adopted in which efficiency in labour use over the cropping season was examined. In order to capture variability in the labour constraint, labour use decisions were differentiated by stages in a cropping season and inferences made with regard to allocative efficiency of labour. On average, the marginal product of labour at the beginning of the season is not equalised to the marginal product of labour at weeding. Many households appear most labour constrained (i.e. show highest marginal labour product) at the beginning of the season.

Lastly, efficiency in labour allocation between the farm and off-farm activities was evaluated. There were large differences between returns to labour employed on farm and off the farm implying that household efficiency in allocation of family labour could be improved. Households which participate in labour markets as sellers or buyers are more productive and efficient in use of family labour on the farm.

While there is no single figure for the opportunity costs of labour in rural households, the study does provide indicators which may be used as guidelines in determining the opportunity cost of labour in farm households. Policy measures that would steer farm households towards more efficient use of their labour include measures which: i) reduce the marketing costs for food and cash crops, ii) increase labour market participation, and iii) improve the functioning of other rural markets like the markets for maize and credit.