SOCIAL INTERACTIONS AND RETURNS TO FARM INPUTS IN SMALLHOLDER AGRICULTURE IN KENYA

Abstract

In this paper, we use OLS, IV-2SLS and Control Function regression methods on cross-sectional data to analyze effects of social interactions among smallholder farmers in rural Kenya on demand for fertilizers and on farm yields. The main finding is that social interactions have large effects on demand for fertilizer and on its return. The interactions are also found to significantly influence returns to basic farm inputs, notably land, farm equipment, and labor.