Maize and beans marketing in Kenya: the interaction and effectiveness of the informal and formal marketing systems

Abstract

The study analyses the functioning of the Kenyan domestic maize and Yearns marketing system with special regard to the interaction of the formal (controlled) and informal (uncontrolled) sub-systems. It attempts to reduce the uncertainty as to what effects relaxation of present controls would have. The relaxation of controls has been suggested in the last three Development Plans but no actions have yet been taken. Initially the determinants of the marketing systems' performance — framework for maize and beans marketing operations, structure and conduct of the marketing systems — are described and analysed. This is followed by an evaluation of the performance guided by the stated objectives of the controls: to benefit producers and consumers. To this end, more specifically, the analysis includes an evaluation of the extent to which the marketing systems operate at lowest possible costs (achieve pricing efficiency), prevent exploitation of farmers and consumers (achieve pricing efficiency) and provide secure outlets for producers and sources for consumers. Survey information of the Central Bureau of Statistics and data gathered by a Maize and Beans Trader Survey carried out in markets of Western, Central and Eastern Kenya with the assistance of the FAO/Kenya Government Marketing Development Project provided the empirical base for the analysis. In summary, the analysis suggests that the objectives of controls are not being achieved and in fact that the present system of controls contributes to marketing inefficiencies. The control legislation has created a marketing framework which is conducive to low operational efficiency as reflected in high marketing costs; low pricing efficiency as reflected in poor market and seasonal integration and relativelv high excess profits; and high instability of market conditions. The analysis further indicates that those most affected by the controls are smallholders and rural and urban low-income consumers whereas those that benefit most are large scale farmers. The result is a negative income distribution effect. In conclusion, it is recommended that controls be relaxed in conjunction with other measures to improve the situation. This would further one of the major objectives of the present development strategy to alleviate rural and urban poverty.