Efficiency of cattle marketing in Kajiado district, Kenya

Abstract

Cattle production and marketing in Kajiado District is the main economic activity, with about 70 percent of the people depending on livestock and their products. Although livestock and their products are considered high value commodities and are expected to fetch good prices in the markets, this has not been translated to better prices for the pastoralists. It was therefore necessary to assess the efficiency of the cattle marketing system in Kajiado District with the objective of determining the factors that influenced cattle pricing and whether the margin between producer and retail price wholly reflected the marketing costs. These are important parameters that can indicate areas for marketing improvement for the benefit of both producers and consumers. This study was carried out in the livestock markets, slaughterhouses and butcheries in Kajiado District of the Rift Valley Province, Kenya, through the collection and analysis of cattle market data covering the entire marketing channel. The analysis of the efficiency of the marketing system was based on the evaluation and comparison of costs and margins of traders. Seller - to - seller and seller - to - buyer relationships and market share held by each type of market participants were used to assess the market structure. The analysis of the degree of collusion or lack of it by producers or traders to fix prices was used to evaluate the market conduct. The results indicate that cattle were marketed either on hoof (trekked) or slaughtered and marketed as beef. The cattle marketing infrastructure was well developed with 11 cattle markets, 21 slaughterhouses, 6 slaughter slabs and 11 holding grounds. Six major stock routes facilitated the movement of cattle from primary, secondary and finally to tertiary markets. Market throughput averaged at 95% of the cattle brought to the market for sale. Both correlation and regression analyses were applied to determine the factors that influenced cattle prices. The factors included liveweight, sex, age, market location, reasons for selling and when to sell. The age variable had the strongest correlation with price (r = 0.698). The six independent variables could explain 53.4% of the variation in cattle prices. Age and reason for selling variables were significant at 0.05 significance level. The two variables could also explain 53.6% ofthe variation in cattle prices. The analysis of market margins indicated that, traders' profit margins as percentages of the marketing margins were higher for the trekked cattle than for cattle slaughtered and then transported as beef. The percentages were as follows: Sajiloni market had 73% for trekked cattle and 23% for the slaughtered cattle that were then transported as beef. Bissil had 74% for trekked cattle and 42% for beef transport. Produ:cers' shares of the final market price were also higher for trekked cattle than for transported beef. For Sajiloni market the percentages were 79% for trekked cattle and 78% for transported beef. Bissil market had 78% for trekked cattle and 75% for transported beef. This was due to lower marketing costs for trekked cattle. Margins also increased along the marketing channel. Returns to invested capital were higher at the butchers' level than at any other level in the marketing chain. For Sajiloni market, returns to invested capital were 5% for transported beef and 18% for trekked cattle. Bissil market had 12% for transported beef and 20% for trekked cattle. Returns for the butchers were estimated at 54%. It can therefore be concluded that trekking of cattle to destination markets was more profitable than slaughtering cattle and then transporting beef. The higher marketing costs in the form of various licenses and levies charged for transported beef were a major constraint in beef marketing. The high profit margins indicated that most of the market margin was taken up by the middlemen's surplus rather than going to the marketing functions, which was an indication of inefficiency in the marketing system. The high return to invested capital by butchers of 54% is as a result of low prices being offered to producers and high beef prices to the final consumers. The implication of this is that ultimately both production and consumption will decrease and thereby minimizing the contribution of this important cattle sub sector to the Kenyan economy.