Abstract

The major challenge facing agricultural investments in Kenya is not the adoption of emerging technologies but the empirical question is whether the adopters really benefit from adoption. While extant literature has been focusing on whether farmers adopt to presented technologies, the novelty of this study is to present whether the adopters really benefit from adoption. The objective of the study was to evaluate the effects of revolving funds on the investment of agricultural inputs. A double hurdle model was applied to determine participation decision and the extent of how the adopters utilized revolving funds. Farmer’s decision on adoption and the ratio of revolving funds dedicated to dairy inputs were made at two separate stages. Results showed that the type of dairy enterprise and farming experience significantly affected the adoption decisions. Group membership and household income levels in the second tier were found to be significant hurdles towards the usage of revolving funds. The policy implication is that for farmers to increase the intensity of the use of revolving funds in their dairy enterprises, two major hurdles must be surpassed; investment in cooperative movements as well as improving the farm and non-farm incomes of the dairy farmers.

Key words: Revolving funds, double hurdle, agricultural inputs.