MST-Department of Agribusiness Management and Trade (AMT)

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Browsing MST-Department of Agribusiness Management and Trade (AMT) by Subject "Determinants"

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    Determinants and Profitability of Coffee Market Outlet Choice among Farmers in Murang’a County, Kenya
    (Kenyatta University, 2021) Keru, Zacharia Ndungu; Bernard Njehia; Lucy Ngare
    The coffee industry is a significantly important contributor to the Kenyan economy. Relatively, this is as a result of coffee farmers’ productivity which trickles down to their individual decisions at the farm and marketing level. When there are different outlets in the coffee market, farmers are expected to utilize the opportunities provided by selling through the most beneficial market outlet. Murang’a County has cooperatives, licensed millers, direct sale and informal traders as the existing marketing outlets. This study aimed at investigating the determinants that lead farmers to the choice of selling coffee through the different marketing outlets and the profits generated through their decisions. The specific objectives were: determining the marketing characteristics of the coffee farmers; analyzing the determinants of coffee market outlet preference and analyzing the farm profitability obtained from the choice of different market outlets. This study was based on the rational choice theory where the farmer weighs in on profit margins and factors that come into play during marketing before choosing an outlet based on the degree of happiness and satisfaction. Purposive sampling method was used in selecting 150 farmers from a sample population of 70,000 farmers. Sample sizes of 68(Kandara), 42(Gatanga) and 40(Kangema) were generated through proportional distribution of respondents. Descriptive statistics techniques such as pie-chart, tables, bar graphs, means and percentages were used in analyzing coffee marketing characteristics of farmers; The Multinomial Logistic Regression model using Stata v13 was used in analyzing the determinants of coffee market outlet choice; and Gross Margin was used in analyzing profitability of outlets. The study findings on marketing characteristics of coffee farmers shows that: Majority of farmers sold coffee in fresh cherry form, followed by dried beans, pulped beans and then clean beans; Sixty percent of farmers had more than twenty years of experience in coffee marketing; More than half of farmers sold quantities below 1 tonne; Sixty one percent of farmers sold coffee below the price of ksh.50 before the survey period; 23% of farmers owned coffee transportation equipment, 29% acquired credit from outlet, 52% were updated with coffee marketing information; Cooperative societies were the most selected followed by Millers, multiple outlets, informal traders and direct sale; Cooperative societies were selected by 72% of members and 20% of non-members, millers by 4% of members and 50% of non-members, informal traders by 6% of members and 13% of non-members, multiple outlets by 17% of members and 12% of non-members, direct sale by 4% of non-members and 0% of members. The regression outcomes on the determinants of coffee market outlet choice showed that the statistically significant estimates at 5% level of significance are quantity offered for sale, distance to market outlet, coffee outlet price, farmer’s experience, credit, ownership of transport, lack of up-to date market information and lack of off-farm income. These findings suggest that an adjustment in each one of the significant estimates significantly influences the probability of selling coffee to/through either of the four market outlets. The profits acquired between farmers selling to different outlets was statistically different (p=0.02) implying that direct sale is shown significantly as the most profitable (GM=415) followed by millers, cooperatives and then informal traders. In view of the research findings, several recommendations are suggested: Coffee cooperative societies should invest in milling plants and offer credit to farmers; Farmers should avoid selling coffee to informal traders and instead dry coffee and sell to millers as dried beans.