Using survey data from 110 randomly selected honey producers from two divisions in Baringo this paper analyzes the constraints and drivers of value addition in honey, an economic activity with a potential to improve household livelihoods but whose development has remained rudimentary. Baringo District undergoes frequent and prolonged drought that impacts on household livelihood assets. The livelihoods have traditionally been agro-based but due to variations in climatic conditions, crop production has been very low. Livestock production has also been adversely affected by these trends, leaving honey production as a viable alternative for smallholder farmers since it is less dependent on, or affected by climatic variations and is not resource intensive. This study uses Heckman two stage and the logistic regression models to determine the extent of value addition contingent on the decision of a honey producer to participate in value addition activity, and to assess the link between honey value addition and household poverty status, respectively. The results show that the decision to add value is positively and significantly influenced by the amount of honey harvested, group membership and amount of hours spent on off-farm activities, while it is negatively influenced the age of the farmers and the education level of the household head. Value addition contributes to the reduction of poverty through the improvement of household incomes. This paper concludes measures need to be put in place that would encourage and facilitate the practice of value addition if the welfare of the poor rural population is to be improved.