The Supply Response Analysis of Maize Production in Kenya

Abstract

The study is on the supply response analysis of maize production in Kenya. Maize is a single most important food crop in Kenya; it provides 40 per cent of the calorific intake, it is grown in about 40 per cent of the land under cultivation, and it provides employment for the majority of rural population. The production has suffered from instability from 1918; and from 1942 to 1992, maize prices were controlled at all levels of trade, thus hindering free trade. The objectives of the study are: to determine whether the supply of maize responded to the price policy, to estimate the short-run and the long-run elasticities of supply, and to evaluate the policies that have been in place since 1993 when maize trade was liberalised. Three hypotheses are tested: that there were no adjustment costs between the time the prices were announced and the area planted; that the regulated producer prices had no effect on the area planted, and that the effects of fertiliser prices were zero. The hypotheses are tested using t-tests with 95% level of confidence.