Assessment of efficiency of agro food marketing systems: a case of macadamia nuts value chain in the Central Kenya highlands

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Murioga, Wilfred Muchiri
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Kenyatta University
ABSTRACT The macadamia industry in Kenya has been faced with numerous operational and marketing challenges forcing the government to impose export ban of raw nuts since 2008 to date. The then Ministry of Agriculture appointed a task force in 2011 to specifically look into challenges that have been facing the macadamia industry including import ban of Kenya’s kernel by USA. Export of macadamia nuts from Kenya has also dropped from 2nd to 5th position in sales volume in the world from 1990s to dare. These problems point to efficiecy challenge. It was upon this background that this study was carried out. The main purpose was to examine and assess the intervening multi-factor market variables that affect the the efficiency of this value chain by concentrating on Central Kenya Highlands. The study sought to assess the efficiency of agrifood marketing systems in five purposively selected counties in the Central Kenya Highlands, focusing on quality control systems, information flow, pricing systems, gross margins, promotion and advertising, as well as market organizational structures and conduct. To achieve this, the study relied on the world economic triangle model and social marketing theory. The world economic triangle model was used in providing information on global markets and global value chain, while social marketing theory was used in providing the strategic orientation of macadamia marketing to increase efficiency. The study developed a conceptual framework which linked the research objectives with five market channel players in order to develop efficiency in the macadamia marketing system in the central Kenya highlands. Multistage sampling procedure was carried out and five sets of questionnaires were used to obtain primary data for analysis. There were 292 market traders taken from 32 stratified market centers in Embu, Kiambu, Kirinyaga, Murang’a and Nyeri counties. Each set of questionnaires was tailored to elicit particular information from the market traders who were 162 farmers, 28 middlemen, 7 processors, 30 distributors and 65 retailers. Data from the field was cleaned, coded and saved for processing using Statistical Packages for Social sciences SPSS version20 and STATA version 12 for descriptive statistics. Both descriptive and inferential statistics were used alongside statistical models such as regression, multiple regressions, integration, co-integration and price transmission, in determining macadamia marketing efficiency. Findings from the study showed that lack of proper organizational structures and conduct, poor pricing systems, lack of centralized authority for quality control standardization and certification of macadamia for exports are some factors that lower the market efficiency. The existing macadamia marketing system was inefficient, which required a total marketing system overhaul and a new marketing strategy in development of macadamia industry. This included adoption of alternative new technology to reverse the current downward market trend of macadamia industry in Kenya, where it has moved from second to fifth position in sales volume in the world in last few years. This study recommends proper organizational structures on quality control, better pricing policies, promotions and advertising as well as auction board to be set, to improve efficiency of macadamia marketing systems in Kenya.
A thesis sumitted in fulfillment of the requirements for award of degree of doctor of philosophy in agricultural marketing in the school of agriculture and enterprise development of Kenyatta University. July, 2018