Agri food efficiency marketing systems: a case study of efficiency of market organizational structures of macadamia industry in Central Kenya Highlands
Muroiga, Wilfred M.
Wanderi, Peter M.
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The macadamia industry in Kenya is a complex one with many diverse interested players, all fighting for the control of Macadamia market, which is assumed to be very profitable against a background of few drying and processing factories having being closed in the last few years. This study assessed the risks and costs involved in marketing while trading on macadamia nuts in the various stages within the long chain which alsoaffects the efficiency of macadamia marketing systems .The study indicated how low quality levels of nuts affects processors ability to enter into contract in the international market, which in turn affects both large and small-scale farmers decreasing market share further. The research found that the future of macadamia industry in Kenya will not depend on the increasing production of raw nuts alone but rather on the ability to develop efficient marketing systems across the whole chain .It is necessary for the country to regain export global market position number two having moved to current position number four in the last few years. This calls for better and relevant educational training to farmers to meet the international market quality standard requirements. International trade in relations to the macadamia industry is important as more than 60% of all processed nuts (Kernel) are exported. The average Sound Kernel Recovery (SKR), of between 18% and 20% for Kenya raw nuts is far too low compared to 30 and 33 percent for Australia and South Africa respectively, which makes Kenya kernel to have comparatively very low market value in the international market. The Government of Kenya ban on export of Nuts in shell (NIS) clearly indicates that there is a major problem of market, which has not been addressed to by a labialized market. Hence there is need to study market systems of the macadamia with the aim of establishing their efficiency. This study relied on primary data from five market channels; farmers, processors, wholesalers, retailers, and consumers, which were collected using multi-stage sampling system from the five stratified counties. Information was collected from 292 respondents using 32 market centers and structured questionnaires to supplement econometric tests, which could reflect factors that inhibit market efficiency. Various methods which included regression analysis, price transmission, integration, price correlation, margins and structure conduct and performance (SCP) analysis were used to measure and analyse the efficiency of market systems of macadamia in the central Kenya Highlands. The data was analysed further using SPSS version 12 and Microsoft excel to determine whether macadamia price movements between the five market channels and five counties reflected a competitive market system, which was used as an indicator of market efficiency. The analysis carried indicated that market efficiency of macadamia was low. The study was to benefit traders who would get properly analysed data to assist in making informed decisions. The Government of Kenya was also to benefit by using the same data in the policy formulation.