Tomato Market Efficiency Analysis: A Study of Nyeri and Karatina Markets, Kenya
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Date
2013-12-23
Authors
Mwaura, V. W.
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Abstract
Agriculture is the backbone of the economy of Kenya. It contributes about 26% of the annual
GDP directly and 25% indirectly. Over 70% of Kenyans particularly those living in the rural
areas earn their livelihood from it. Sustainable agricultural growth is therefore crucial for
improving their living standards and stimulating economic growth. It is estimated that over
25?~OO ha of the total cultivated land in Kenya are under fruits and vegetables production
and'that over 80% of the total producers are small scale farmers. It is also estimated that over
90% of the total fruits and vegetables produced are traded in the local markets. Agricultural
produce marketing is vital in Kenya and other developing countries as it creates an incentive
to improved production thus positively contributing to food security and household income.
Improved agricultural production increases the demand for farm inputs and implements which
promotes industrial growth. Marketing creates job opportunities both directly and indirectly
hence contributing to millennium development goal (MDG) number one on extreme poverty
and hunger eradication. Through marketing, those living in low and none productive areas like
municipalities are able to get enough food supplies. Literature shows that despite its
importance, agricultural produce marketing has been neglected by researchers for long not
only in Kenya but also. in other developing countries. There has been a lot of research on how
to increase agricultural production as opposed to marketing improvement. This has resulted to
low development of the existing marketing systems. Literature also shows that agricultural
produce marketing has been low in efficiency not only in Kenya but also in other developing
countries. Moreover, most agricultural produce like tomatoes and other fresh vegetables are
highly perishable and cannot be stored for long. Tomatoes are highly sensitive to poor
handling and exposure to excess heat. They are highly demanded countrywide but produced
only in suitable areas or in greenhouses by able farmers. Moreover there has been production
increase caused by adoption of greenhouses in recent years. Due to these factors, tomatoes
require a highly efficient marketing system. Market efficiency is affected by market structure
and conduct among other factors. Nyeri and Karatina markets are expected to differ in
structure based on their size difference. Their current level of efficiency is not known. This
study therefore, will look at the efficiency of tomatoes marketing and the factors that
influence it in Nyeri and Karatina markets, within Nyeri County, Kenya. A survey will be
conducted by interviewing a sample of tomato market traders in the two markets of study.
Sampling of tomato market traders will be done using simple random sampling method.
Those sampled will then be guided to fill the questionnaire. The data so collected will be
synthesized and recorded in excel spread sheet. Analysis will be done in four stages. The first
stage will' involve determination of marketing cost and market margin. In the second stage
market efficiency level will be determined as percentage. In stage three, the efficiency
percentage obtained in stage two will be regressed on some independent variables
hypothesized to have effects on market efficiency. This will be done to estimate their effect on
the efficiency. Stage four will compare the efficiency of the two markets. The findings of this
research will increase the level of Knowledge on marketing efficiency. It will facilitate
planning for improvement of agricultural produce marketing. This will translate to better farm
gate prices, better consumer prices and reasonable profit for traders. Farmers and traders will
therefore earn more income, while consumers will have some savings. The beneficiaries of
this study therefore will be farmers, traders, consumers and Kenyan citizens at large will
benefit from the contribution made to the economy.