Transport costs and smallholder cropping choices: An application to Siaya District, Kenya

Smallholders regularly devote larger shares of resources to low-yielding food crops than they do to cash crops that have higher market returns. In this paper, costly exchange is incorporated into an agricultural household model, and a numerical nonseparable version of the model is used to show that seemingly inefficient cropping choices of this type in Siaya District, Kenya, can be explained as rational food import substitution given high transport costs in product markers. Improved rural road networks that reduce these costs could abate motives to meet food needs through domestic production and promote specialization that raises farm incomes.