| dc.description.abstract | This study assesses the factors determining demand for raw materials
in food processing firms. The overall objective of the study was to
assess the determinants of demand for soybean as a raw material in
food processing firms. The city of Nairobi, Kenya was selected as a
case study because it hosts a majority of these firms.
The study methodology and approach was based on reviewing of
available documents from various sources and face to face interview. A
cross-sectional survey was carried out for the soybean processing
firms operating within the city. Firms were first contacted to confirm
they were still in operation and to determine their sizes through the
numbers of their employees. Probability sampling was employed
whereby the sample was stratified into four groups according to the
sizes of the firms. Firms were grouped into micro, small, medium and
large enterprises.
The study established that the major determinants of demand for
soybean are: prices of soybean; firm size; age of the firm; quality of
soybean grain and the level of infrastructure within the country.
Correlation and regression analysis were carried out for the three
variables, that is, the prices of soybean, firm size and the age of the
firm since inception. The analysis revealed an inverse relationship
between the prices of soybean and the quantity demanded by the
firms. Another finding was that both firm size and age of the firm have
a positive relationship with demand. In other words, as the firm
employs more and more workers the demand for the raw materials
increase and the longer a firm operates in terms of the years, its
demand increases for the raw materials.
Moreover, it was found out that the quality of raw materials
determines its demand. Firms were more interested in good quality of
the soybean, which includes protein content, moisture content and the
size of the bean.
The constraints faced by the soybean processing firms were also
examined. The key finding was that farm production of soybean within
the country is low ~nd therefore processing firms are forced to
externally source the commodity, by importing from other countries.
In addition, other constraints include notably poor physical
infrastructure such as roads that impede transportation of raw material
from the rural production areas, energy and telecommunication; high
prices of soybean; and poor quality of soybean grain.
The study has highlighted some policy recommendations in order to
address these constraints. Among them are: adequate budgetary
allocation by the Government for improvement of the infrastructure
particularly on roads and electricity; provision of adequate funds to
research institutions to come up with good quality soybean varieties
for processing; creating an enabling environment for doing business by
giving incentives such as easing of importation procedures and
reduction of import duties by the Government; and encouraging the
small-scale producers to engage in farming as a business. | en |
