Economics of small ruminant marketing in coastal Kenya

Abstract

The study was set to evaluate the marketing system of small ruminants in coastal Kenya with the following objectives: i) Identify factors related to commercial off take in the study area, ii) estimate the marketing costs and margins accruing to various marketing agents in the small ruminant marketing chain, iii) test for existence of spatial integration between different channel levels in the small ruminant marketing chain. A farm household survey of 76 households in Kaloleni division of Kilifi District found farmers to own small ruminants for sale to meet household subsistence requirements. Seasonal cash need was identified as the main factor related to sale of small ruminant in the household. In addition, a survey of rural distributive markets and abattoirs serving the study area identified five channel levels namely; (i) producers (ii) assemblers (iii) itinerant traders (iv) retailers, and (v) consumers in the marketing chain. The analysis of marketing costs and margins indicated rates of return on capital investment of about 15 percent per head of small ruminant for assemblers. All itinerant traders recorded less than 10 percent return per head save for Bamba- Kasemeni channel that recorded about 20 percent. The marketing cost varied between 9 and 15 percent of the total cost per head in all the channels for itinerant traders. Price correlation analysis showed the distributive markets Bamba and Mariakani, Kinango and Mariakani, and Bamba and Kinango to be integrated. All the abattoirs were integrated in prices with respect to each other. Bivariate regression results showed lack of integration between Bamba distributive market and Mariakani abattoir. Arbitrage cost was suggested between Bamba and Kasemeni abattoir, Tsangatsini and Mariakani abattoir, as well as Mariakani and Mariakani abattoir. All the abattoirs showed integration with respect to each other. In conclusion, the marketing system was both technically and price efficient as shown by marketing margins and cost analysis as well market integration evaluation. However, further research on the marketing system of hides and skins needs to be conducted. Bivariate regression analysis provided results consistent with traders observations regarding integration of distributive markets and the abattoirs. For future studies, regression models such as the Ravallion model that incorporates a vector of other significant market determinants is suggested for more conclusive results.