| dc.description.abstract | The animal feeds industry has been characterized by
shortages, erratic price fluctuations and low quality animal
feeds. In an attempt to examine the cause (s) of these undesirable
performance outcomes, this study analysed the structure and
conduct of the marketing system for animal feeds using the
structure-Conduct-Performance Model. The structure was assessed
using concentration ratio and degree of inequality. The conduct
of the manufacturers and traders in setting prices, selling
practices and presence or absence of collusive activities was
examined. The price levels were assessed at the different channel
levels in an attempt to compare the marketing margins and costs.
The existence of any distribution and or procurement constraints
within the marketing system was examined. Primary data obtained
by interviewing animal feeds manufacturers, traders and livestock
farmers in Nairobi and Kiambu District were utilized.
The results indicated that the animal feeds industry was
characterized by a high degree of concentration and inequality,
with one firm, Unga Feeds Limited controlling over 75 percent of
the market share. Market penetration, capital requirements were
some of the barriers into the industry that existed . Despite
these barriers, several firms had emerged the previous five
years. Within the distribution, no such inequality and
concentration existed. However collusive activities appeared to
be rampant.
Unga Feeds Limited acted as the dominant price leader. It used
cost-plus basis for pricing the feeds. The ex-factory prices
varied from one manufacturer to another due to price
undercutting. The traders' marketing margins were significantly
different from their marketing costs at 95% confidence interval.
The degree of vertical integration was low, with only one
manufacturer distributing pig feeds to the farmers directly.
seventy one percent of the manufacturers indicated that high cost
of production was a major problem. Marketing of animal feeds was
indicated to be a problem by 50% of the manufacturers. Inadequate
foreign exchange allocations and delay in processing of import
licences to enable the manufacturers to purchase ingredients had
43% and 29% percent response respectively. Acquisition of raw
materials, lack of adequate credit facilities, high transport
charges and poor transport infrastructure were also cited.
It is recommended that the nutrients which are imported should
be locally produced to avoid the foreign exchange and the import
licensing problem. The transport infrastructure and necessary
amenities could be improved. This requires repairing the existing
road networks. In addition, fuel prices should be reduced so as
to reduce the production and transportation costs. The
manufacturers could be allowed to buy the amounts of grains that
they require without restrictions from the National Cereals and
Produce Board. | en |
