Background: The failures of land reform projects in South Africa are linked to many factors including lack of skills, capital, markets, etc., to new farmers. Hence, there has been growing interest to implement joint-ventures between established farmers and new land recipients. It is argued that the ventures would not only allow new farmers access to capital and skills but also to existing networks of their business partners. Nevertheless, the projects continue to fail including some of those in joint-ventures and often due to managerial conflicts.

Aim: This study argues that the conflicts stem largely from limited or obscure information flows which raise transactional costs of doing business. An illustration of how diversifying production and marketing strategies by Kenyan smallholders can limit risks associated with transactional costs for high income returns is presented. Lessons are drawn to support land reform projects in South Africa.

Setting: An investigative case of how smallholders conducted successful businesses in the Kilifi County of Kenya in 2018 is presented with lessons drawn for South Africa.

Methods: Mixed research methods were used in gathering data from semi-structured interviews with farmers using online platforms. The information was then used to construct a questionnaire for a 2018 field survey conducted in the Kilifi County. Descriptive patterns of farmer behaviours were analysed and presented using STATA alongside results from a multinomial logistic model using the survey data. The data and model were used to explore the probable correlations and odd magnitudes between land sizes used for farming and marketing strategies against income returns.

Results and conclusion: Farmers on land below 4 acres were more likely to diversify their products, and marketing strategies than farmers on plots above 20 acres. The relative income returns to strategies used by smaller farmers were the highest of the sample. The high-income returns were also associated with clearly defined land ownership rights for smaller farmers.