Market efficiency, choice of marketing channel and supply of macadamia among small holder farmers in embu west sub-county

Abstract

In Kenya horticulture contributes greatly to the economy and particularly nuts play a crucial role in income generation with macadamia production been ranked among the top enterprises. The crop leads to job creation and acts as an income incentive to smallholder farmers. Despite its potential in the Kenyan economy, macadamia production has not been fully exploited resulting from a weak link between extension and farmers. This has occasionally translated to low market efficiency, farmers participating in low rewarding channels and farmers producing low yield. The study provides insight on market efficiency, choice of marketing channel and quantity of macadamia supplied to the market. The study was guided by three objectives; to assess selected institutional and socio-economic factors that affect market efficiency, to determine selected market and socio-economic factors that influence participation in various marketing channels and to assess socio-economic factors that affect the quantity of macadamia supplied to the market. The study provides information on most profitable marketing channels available to farmers. Data used in the study was collected using a structured questionnaire from 337 smallholder macadamia farmers who were selected randomly in Embu West Sub-County using stratified multistage random sampling technique. The study was guided by the Supply theory and Random Utility theory to explain how farmers made decision to participate in a channel and supply macadamia. A cross sectional survey design was adopted in the study. In assessing the institutional and socio-economic factors that affect market efficiency, the study adopted the stochastic frontier production function analysis. In determining selected market and socio-economic factors that influence choice of a marketing channel the study used the multinomial logit regression model and to assess the socio-economic factors that influence the quantity of macadamia supplied to the market the study adopted the multivariate multiple regression model. The findings revealed that the mean of market efficiency was 8.15 %, broker channel 48.1% was the most preferred channel and farmers supplied an average of 128.37 kilograms. The findings of this study provide information to sectors involved and policy makers and recommends on the need to put feasible strategies such as increasing extension and setting more collection centers for profitable channels to enable farmers fetch higher returns from macadamia farming.