Analysis of the pineapple marketing system in selected markets in Kenya

Abstract

An efficient marketing system is a stimulant to the development of a nation’s economy. It enables markets to function in their dynamic role of coordinating resource allocation and providing price signals to producers and consumers that reflect their opportunity cost of their decisions, and enhancing their ability to react quickly and efficiently. In a market,the price mechanism is expected to transmit orders and directions to determine the flow of marketing activities. Identifying the causes of price differences in spatial markets has therefore become an important analysis to understand markets better. If markets are not well integrated, price signals are distorted, which leads to an inefficient allocation of resources. The pineapple marketing system in Kenya deserves to be developed into a strong network of efficiently functioning markets, as more than 95% of the pineapple production is channelled regionally. Due to huge price differences in the markets, there may be a problem in the markets that is the markets may be segmented. The study therefore, aimed to analyze the pineapple marketing system in selected markets in Kenya, with a view of making recommendations for improving the marketing system in the region. These markets were, Bureti, Kericho, Bomet and Narok markets. The objectives of the study were to identify pineapple marketing channels and the role of marketing agents, determine whether pineapple markets in the region are integrated, determine the marketing costs associated with pineapple markets and to investigate price variations between rural markets and urban markets in relation to marketing costs. It was hypothesized that pineapple markets in the selected markets were not integrated and pineapple price variations across markets do not reflect marketing costs.. Purposive sampling was used to select four markets, with Bureti as the rural/source market and urban markets were Kericho, Bomet and Narok. Primary data were collected with the aid of structured questionnaires distributed to the respondents at the various rural and urban markets to capture the operating costs, returns, socioeconomic and marketing characteristics of the marketers in the study area. A random sampling technique was used to select a total of 168 traders from rural and urban markets. Time series monthly pineapple price data covering 2007 to 2011 (5 years) collected from the Ministry of Agriculture was used to analyze market integration. The statistical package for social scientists (SPSS) was used to generate descriptive statistics while time series data were analyzed using Eviews. The study revealed that women are more involved in pineapple marketing; most of the respondents had primary level of education and have been in the business for about 1-5 years. The study also indicated that price variations across markets reflect the marketing cost. Price differentials between rural and urban markets could be attributed to the scarcity of the product in the urban areas leading to a high demand. The results of market integration analysis shows that the selected pineapple markets were integrated and followed a long run relationship. Transportation cost accounted for the largest component of total marketing cost in both rural and urban markets and this is followed by storage cost. Thus efforts to reduce transportation and storage costs in terms of good roads and the use of effective storage facilities will be important factors that will facilitate market integration between rural and urban markets for pineapple.