Journal of Economics and Sustainable Development www.iiste.org ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.4, No.19, 2013 38 Socio-Economic Factors Influencing Farmers’ Participation in Grain Warehouse Receipt System and the Extent of Participation in Nakuru District, Kenya Julius K. Mutai 1* Patience Mshenga 2 Bernard K. Njehia 3 , Geoffrey K. Kosgei 4 1. Kenyatta University Department of Agribusiness Management and Trade 4. Egerton University,Department of Agricultural Economics and Agribusiness Management 1. Egerton University, Department of Agricultural Economics and Agribusiness Management 2. Egerton University, Department of Agricultural Economics and Agribusiness Management 3. Kenyatta University, Department of Agribusiness Management and Trade 4. Egerton University, Department of Agricultural Economics and Agribusiness Management * E-mail of the corresponding author: jmutaisan@gmail.com Abstract Post harvest losses in Sub-Saharan Africa (excluding South Africa) are generally high, arising from handling, transportation, storage, processing and packaging and marketing. In Kenya, it is estimated that 21.1% of total annual maize production is lost through poor post harvest handling techniques. As an effort to mitigate post- harvest losses, the Government together with development partners introduced the Grain Warehousing Receipt System (GWRS). Under this system, farmers store their marketable surplus in parastatal storage capacity or private grain handling service providers. The farmers are charged for storage service. As certification of their deposition, farmers are issued with receipts from the warehouses. The receipts can be used to access credit facilities from cooperating financial institutions up to 80% of the prevailing maize market prices. After waiting for prices to rise over the storage season, the farmers market the produce and payment made through respective financial institutions. Methods: The study was carried out in Nakuru District, Kenya. Double Hurdle model was used to estimate factors influencing farmers’ participation in GWRS and the extent of participation. The sample size was 178 farmers using multistage sampling technique where two divisions, Mauche and Gilgil were chosen to represent zones where maize farming is commercialized. Each of these divisions had 89 farmers randomly selected.The determination of sample size was through the approach based on the precision rate and confidence level. Results: Six explanatory variables were found to significantly influence participation in GWRS. Gender and distance to warehouse negatively influenced participation in GWRS while gender land size under maize production, off farm income, group membership positively influenced participation in GWRS. On the extent of participation in GWRS, five dependent variables were found to significantly influence participation in GWRS. Gender, household size and distance to warehouse negatively influenced while land size under maize production, group membership positively influenced the extent of participation. From the study the following recommendations are made; Strengthening of farmer owned organizations is highly recommended. This is achievable through capacity building and training on organizational development. Empowering women in agricultural activities is desirable. Offline diversification should be promoted to enhance household income. Grain driers and collection points should be made available at distance which farmers access them with ease to counter quality and transport challenges experienced by farmers. Storage costs charged by warehouses, interest on loan and loan arrangement fees should be brought down through research for farmers to optimize profit. This can be achieved by approving more warehouses, involving more cooperating financial institutions, warehouses diversifying to offer farm inputs and financial services and offer contract farming. Keywords: Socio-economic characteristics, Participation, Marginal effects 1.0 Introduction Maize is the foundation in Kenyan diet with per capita consumption of 98 kilograms which translates to a national total of 30 to 34 million tonnes (2.7 to 3.1 million metric tonnes) making the price of commodity in the country to be among the highest in Eastern and Southern Africa. The lowest quartile of Kenyan population spends 28% of its income on maize (Guantai et al. 2007). From the maize producers’ point of view, increased productivity, more efficient markets and rational government policies could dramatically alter the economic contribution of maize sub-sector from being a drag in the economy to becoming a key element in accelerated growth and poverty reduction (Kalunda et al. 2003). However, poor post harvest handling and storage of the harvested maize often results in reduced value of stored grain, negating the benefits of improved productivity as