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Descriptive analysis of dry fish business
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ECONOMICALLY FEASIBLE OPTIONS FOR INCREASED FEMALE
PARTICIPATION IN KENYAN AQUACULTURE VALUE CHAIN
Leah Z.B. Ndanga*, Kwamena Quagrainie & Jennifer Dennis Department of Agricultural Economics Purdue University 403 W. State Street West Lafayette, IN 47905-2056 [email protected]
Outline 1. Introduction
2. Tilapia and Catfish value chains
3. Porter’s 5 forces industry analysis
4. Factor evaluation matrix (FEM)
5. SWOT analysis
Outline 6. Economic Profitability Analysis
7. Cost Benefit Analysis (CBA)
8. Key Success Factors
9. Opportunities
10.Conclusions
Introduction • Fish -important food source in many Africans’ diets
• Fish supply in Kenya- mainly wild capture fisheries and
imported marine fish
• Aquaculture development in Kenya- identified as a core activity for funding in NEPAD Action Plan in 2000.
• Growth in aquaculture- cover the fish supply gap.
• Despite government’s efforts (ESP program), access to capital - major constraint
Introduction (continued) • Limited distinction in marketing of wild caught fish and
farmed fish
• Farmed fish- usually sold directly to consumers, or nearby small traders and establishments
• Main aquaculture activity- pond culture of mainly Nile tilapia (Oreochromis niloticus) and African catfish (Clarias gariepinus)
• Fish production in male domain- relied on the full participation of women and family
• Women traditionally have central position in harvesting, post-harvest handling of fish and marketing.
Tilapia and Catfish value chains
Industrial Processing
Multiplication centers/ hatcheries
Lake/ river National & Private Breeding Centers
Middlemen/ Buying Agents
Retailers
Export
Market
Growout Farmer
Farmer/ Breeder
Domestic Market Consumers Restaurants/ Hotels Institutions
Nile Perch fishers
Bait Market
Wholesalers
Small scale processing
Input suppliers
Figure 1: Tilapia and African Catfish supply chain in Kenya Adapted from Quagrainie, et al (2007), Charo-Karisa, et al (2007) & survey findings
Interviewed value chain participants
1. Input suppliers – Aquashops and Agrovets – Harvest equipment suppliers – Irrigation and Greenhouse equipment suppliers
2. Fish farmer/ Input suppliers 3. Fish farmers 4. Fish marketers
– Wholesalers – Retailer/ Traders – Processors
Porter’s 5 forces industry analysis
Industry Rivalry
High
Supplier power
High
Threat of Substitutes
High
Buyer Power
Medium
Threat of New
Entrants High
Input supply
Porter’s 5 forces industry analysis
Industry Rivalry
Medium
Supplier power
High
Threat of Substitutes
Low
Buyer Power
Low
Threat of New
Entrants Medium
Fish farming/ Input supply
Porter’s 5 forces industry analysis
Industry Rivalry
High
Supplier power
High
Threat of Substitutes
High but declining
Buyer Power
Medium
Threat of New
Entrants Medium
Fish farming
Porter’s 5 forces industry analysis
Industry Rivalry
High
Supplier power
High
Threat of Substitutes
Low
Buyer Power
Medium
Threat of New
Entrants Medium
Fish Marketing
Factor evaluation matrix (FEM)
Harvest equipment suppliers
Aquashops and
Agrovets
Irrigation & Greenhouse
Material Supplier
Western Province
Fish Farmers
Central Province
Fish Farmers
City Market
Fish Marketers
Gikomba Market
Fish Marketers
Kisumu Fish
Marketers
Eldoret Fish
Marketers Place Importance
Ranking 4.67 4.00 4.00 4.00 4.00 5.00 4.00 5.00 3.00
Performance 4.67 4.50 4.00 4.50 4.50 4.23 4.03 4.08 4.00 Score 21.78 18.00 16.00 18.00 18.00 21.15 16.13 20.38 12.00
Price Importance Ranking
4.67 3.50 4.00 4.50 4.50 5.00 5.00 5.00 5.00
Performance 4.67 4.00 3.00 4.00 3.00 3.38 3.47 4.12 4.36 Score 21.78 14.00 12.00 18.00 13.50 16.92 17.33 20.58 21.79
Product Importance Ranking
4.67 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Performance 4.67 4.00 4.00 3.00 3.80 3.92 3.77 4.31 4.21 Score 21.78 16.00 20.00 15.00 19.00 19.62 18.83 21.54 21.07
Promotion Importance Ranking
3.67 2.50 4.00 1.00 1.00 3.00 3.00 3.00 4.00
Performance 3.33 1.00 4.00 1.00 1.20 3.73 3.62 3.58 3.50
Score 12.22 2.50 16.00 1.00 1.20 11.19 10.85 10.73 14.00 Procurement Importance
Ranking 4.67 4.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00
Performance 4.67 4.50 4.00 3.00 3.50 3.12 3.04 3.96 3.36
Score 21.78 18.00 16.00 15.00 17.50 15.58 15.19 19.79 16.79
TOTAL SCORE 99.33 68.50 80.00 67.00 69.20 84.46 78.33 93.02 85.64
Radar chart of Fish marketers’ performance in terms of the Marketing Mix
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5Place
Price
ProductPromotion
Procurement
City Market Fish Marketers Gikomba Market Fish MarketersKisumu Fish Marketers Eldoret Fish Marketers
Radar chart of Input suppliers and fish farmers’ performance in terms of the Marketing Mix
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0Place
Price
ProductPromotion
Procurement
Harvest equipment suppliers Aquashops and AgrovetsIrrigation&GreenhouseMaterialSupplier Western Province Fish FarmersCentral Province Fish Farmers
SWOT analysis for input supply Strengths Weaknesses • Diversified product offering • Temperature control • Convenient bulk sales • Expensive transportation • One stop shop • Customer defaults on payment • Training & Consultation on aquaculture • High initial capital investment • Liaisons with government - Department
of Fisheries referrals Opportunities Threats • Only 6 government accredited
aquaculture input suppliers • More crime- higher incidence of con
men, thefts and burglaries • Well defined market with access to
capital • US$ fluctuations • More fish farmers- more customers • Customs and port delays • Successful 2008 ESP government pond
initiative • Expensive transportation and
Transport delays • Increased local government financial
support • High input prices • Referrals from government for technical
assistance • Slow delivery of inputs
SWOT analysis for fish farming/ input supply Strengths Weaknesses • Only available option in close proximity • High initial capital investment • Good verifiable Quality • Temperature control • Training & Consultation on aquaculture • Lack of binding contractual
arrangements • After sale services/free consultation • Expensive transportation- no delivery • Great service-personal touch • Small scale- no chain power • Connects supply chain actors Opportunities Threats • Only 6 government accredited
aquaculture input suppliers • Lack of support structure and
institutional organization • Shortage of fingerling/fry to stock ponds • US$ fluctuations • More fish farmers- more customers • Lack of quality control in terms of
inputs • Successful 2008 ESP government pond
initiative • Input supply delays and shortages
• Referrals from government for technical assistance
• Fish culture inputs too costly/not available locally
• Increased local government financial support
SWOT analysis for fish farming Strengths Weaknesses • Less labor intensive than other
agriculture • High initial cost for training, pond construction &
inputs • Improved food security- ready protein
source • Need expert for choice of fish species and
appropriate culture • Source of water used for irrigation &
livestock and household use • Require training on fish rearing and pond
management • Pond bottom mud used to fertilize
gardens/fields • Require expert evaluation of location/site/water
and constant access for problem diagnosis & solutions
• Enhanced community relations- farm gate sales
• Expensive construction and operation costs
Opportunities Threats • Successful 2008 ESP government pond
initiative • Constrained access to inputs
• Increased local government financial support
• Lack of trained extension officers
• Ready market due to government undersize fish ban
• Shortage of fingerling/fry to stock ponds
• Branching into input supply &/or value addition
• Low land availability
• Change source of inputs-purchase, rent, or hire
• Need close proximity to water
• Can diversify into ornamental or bait fish • High labor costs
SWOT analysis for fish marketing Strengths Weaknesses • Can engage in wholesaling, trading and
processing concurrently • Fish perishability-leftover & due to
transport delays • Low start up and operating costs • Low profits-high buying and low selling
prices • Convenient bulk sales delivered to
market • Crime & Theft by middlemen & employees
• Can process (dry, smoke or fry) leftover fish
• Access to capital/finance
• No construction or training required • Transportation for fish supply, to market • Low switching costs in terms of products
of location • Expensive storage and refrigeration costs
Opportunities Threats • New farmed fish market • Less/none government assistance in some
markets, • More female traders • Poor roads-delayed delivery & accidents • More youth economic participation in
market • Fish shortage - undersize fish policy and
underdeveloped aquaculture sector • Better market conditions from
government • Poor hygiene in the market &
transportation • Consolidation into one market facility • More crime & corruption • Improved sanitation (slight) • Increased competition even from other
markets
Fish marketers’ Economic Profitability Analysis
Summary of Fish Marketers’ Household Benefit: Cost Ratio
Monthly Averages
Nairobi Markets, Central
Province
Kisumu Market, Western Province
Eldoret Markets,
Rift Valley Province
Sample Total
Total Annual Costs 244,354.28 128,824.64 133,213.30 198,503.77
Total Annual net revenue 580,896.55 218,266.67 225,454.55 437,174.39
Benefit: Cost Ratio 2.33 1.694 1.692 2.202
Fish farmers’ Economic Profitability Analysis Summary of Fish Farmers’ Household Benefit: Cost Ratio & Net Benefits Western
province Central province
Rift Valley province
Year one Average Benefit: Cost Ratio 0.328 0.009 0.018 Average Net Benefits (Ksh)
-104, 460.96 -98, 352.53 -65, 223.11
Year Two Average Benefit: Cost Ratio (Ksh) Percentage change from previous year (%)
1.751
81.28
0.107
92.01
0.024
23.67
Average Net Benefits (%) Percentage change from previous year (%)
-737.09
-14, 072
-18, 331.33
-436.53
-32, 660.74
-99.70
Cost Benefit Analysis (CBA) Summary of the estimated values of the effects of aquaculture on society’s welfare in Ksh
Year 1 Year 2 0% 5% 15% 30% 50%
Value of increase in local employment per farm Central province 13,572.08 12,677.85 12,074.14 10,499.25 8,076.35 5,384.23
Western province 2,540.06 13,561.28 12,915.50 11,230.87 8,639.13 5,759.42 Rift Valley Province 21,493.33 21,493.33 20,470.00 17,800.00 13,692.00 9,128.10
Value of increase in local food availability per farm
Central province 1,760.18 7,975.29 7,595.51 6,604.79 5,080.61 3,387.07 Western province 357.17 1,520.23 1,447.84 1,258.99 968.45 645.64
Rift Valley Province 31.4 58.91 56.11 48.79 37.53 25.02
Value of generated growth in local economy
Central province 1,021.65 1,822.10 1,735.33 1,508.98 1,160.76 773.84 Western province 4,971.53 27,364.14 26,061.09 22,661.82 17,432.17 11,621.44
Rift Valley Province 663.13 720.88 686.55 597 459.23 306.15
Key Success Factors i. Input supply • Stable finances and substantial capital resources
• Large contracts and/or links with NGOs and government
department to ensure referrals and large contracts
• Good planning and foresight to circumvent effects of delays
• Access to personal or reliable transportation
• Strategic alliances
Key Success Factors (continued) ii. Fish farming/Input supply • Strong knowledge base
• Stable finances and substantial capital resources
• Established good fish breeds, i.e. good brood stock
• No accredited fish breeding centers or hatcheries in close
proximity
• Strategic alliances
• Alternative electricity source
Key Success Factors (continued) iii. Fish farming • Stable finances and substantial capital resources
• Reliable accredited input supplier
• Good knowledge base
• Patience and determination
• Integrated aquaculture and agriculture system
• Alternative electricity source
Key Success Factors (continued) iv. Fish marketing
• Versatility and persistence
• Discipline in terms re-investing earnings
• Good inter-personal skills and engaging personality
• Cleanliness
• Ability and equipment to perform light processing
Opportunities Rankings based on ease of entry and exit
Supply chain function
Reasons for choice
1 Fish Marketing
• Provides the most flexibility and liquidity • Easier to enlist additional assistance- no training
needed 2 Fish
farming • Despite the high capital investments and high entry
barriers, some of the costs can be minimized by practicing an integrated system
• Aquaculture is not as labor intensive as other agricultural activities
• Requires a long term commitment, patience and persistence
3 Fish farming/ Input supply
• Require large capital outlays and additional finances in case of emergencies.
• Only established fish farmers can assume this role- need reliable good quality and significant quantity stocks
4 Input supply
• Require large capital outlays and additional finances in case of emergencies.
• Often a full time obligation • Government & NGO interest reduces transaction costs
Conclusions • Fish farming is the driving function of the aquaculture value chain
• Sale of fish enhances community relations and creates a stable
source of income and food.
• Female participants seeking flexibility and liquidity - fish marketing.
• Those seeking long term financial strength and with strong educational and technical backgrounds - input supply.
• Those not looking for quick returns and looking for long term stability- fish farming
• Established fish farmers may consider diversifying into input supply and value addition.
Conclusions (continued) • Input supply continues to be an Achilles heel for all value
chain actors.
• The government of Kenya commendable - boosting aquacultural sector through its incentive schemes and ESP program.
• Private sector involvement commendable - aquashops (FARM-Africa and the UK funded Research into Use program) and agrovets (CNFA) initiatives.
• Need for a multi-level collaborative effort to determine a long term strategic plan that benefits and includes all value chain participants
Funding for this research was provided by the
COLLABORATIVE RESEARCH SUPPORT PROGRAM
Thank you!
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