Determinants of distress sales of farmland in rural Kenya

Abstract

Kenyan households, as in many rural areas in developing countries, suffer frequently from effects of shocks. Yet, they have limited access to effective coping strategies. Vulnerable households end up resorting to ineffective coping strategies such as distressed sales of farmland. Distress land sales limit household productive capacity and increase vulnerability to future shocks, thus entrenching poverty. Using a nationally representative data collected in two waves, we examine the circumstances under which rural households in Kenya sell farmland following shocks. We find that specific shock characteristics, household characteristics and the household social and physical environments are associated with distress sales of farmland. The likelihood of selling farmland was higher for idiosyncratic shocks and those that resulted in higher monetary and material losses. The likelihood of engaging in distress land sales was also higher in households with older heads, with more land holding, where land markets existed and in households that depended on social safety nets. The likelihood of distress sales was however lower in households with more educated heads, more livestock value and access to all-weather roads. These findings are thereafter discussed in the Kenyan context, and policy suggestions are offered for building rural households’ resilience to shocks.