Navigating Market Choices: Understanding Carrot Market Outlet Selection among Smallholder Farmers in Kenya

Abstract

This research delves into the hurdles and strategies aimed at augmenting the market involvement of smallholder carrot farmers in Nakuru County, Kenya. Employing a Multinomial Logit (MNL) model, it scrutinizes the factors influencing the selection of marketing outlets among carrot farmers. The findings unveil that a significant majority (81%) of surveyed farmers actively participate in diverse market outlets, encompassing the farm gate, cleaning point, local market, external market, and export market. Notably, pivotal buyers include aggregators, brokers, wholesalers, retailers, and consumers, with transactions predominantly occurring at the farm level. Additionally, the analysis discerns substantial influences of socio-economic characteristics, experiential factors, and geographical proximity on farmers’ choices of market outlets. Specifically, gender, age, land size, farming experience, and distance to markets emerge as critical determinants. Moreover, the study delves into the examination of market margins along the carrot value chain, shedding light on the potential profitability of carrot farming in the region. Remarkably, higher average gross margins are identified in export and external markets, signaling lucrative prospects for farmers targeting these segments. However, disparities in profit distribution between farmers and traders underscore the necessity for interventions to ensure equitable value distribution throughout the value chain. These findings underscore the imperative for tailored interventions to tackle challenges and foster inclusive agricultural development. Strategies such as farmer organizations, contracting, and vertical integration are advocated to enhance market access and profitability for smallholder carrot farmers. Thus, this study enriches our comprehension of the dynamics within carrot value chains and provides valuable insights for policymakers and development practitioners aiming to uplift rural livelihoods and bolster food security.

Share and Cite:

Ngeno, H. , Evans, N. , Ingasia, O. and Bett, H. (2024) Navigating Market Choices: Understanding Carrot Market Outlet Selection among Smallholder Farmers in Kenya. Agricultural Sciences, 15, 676-703. doi: 10.4236/as.2024.156037.

1. Introduction

Agricultural production in developing countries has faced a global decline of 0.7% [1], with Sub-Saharan Africa (SSA) particularly affected by adverse weather conditions and conflicts in East and West African countries, leading to widespread crop damage and subsequent production downturns [2]. In Kenya, approximately 2.4 million people are severely food insecure due to prevailing dry weather conditions, negatively impacting crop and livestock production and constraining food availability and access nationwide [1] [3]. Reduced domestic supplies, attributed to below-average first-season harvests caused by erratic rainfall, have driven up agricultural produce prices in Kenya [1]. Despite these challenges, agriculture remains central to the Kenyan economy, serving as the largest foreign exchange earner and a key player in achieving the country’s Vision 2030 development agenda. The sector contributes over 30% to the Gross Domestic Product (GDP) and employs more than 60% of the population [4].

Horticulture stands out as a leading sub-sector within agriculture, contributing 36% to the agricultural GDP and ranking as the third-largest foreign exchange earner after tea and coffee [5] [6] [7]. This sector also significantly impacts the economy by providing direct employment to around 350,000 individuals and supporting over six million livelihoods [5]. Notably, the majority of horticultural produce, accounting for 96%, is consumed locally, playing a crucial role in household food security for smallholder farmers who produce the bulk of these crops [8]. The success of the horticultural sector can be attributed to factors such as the adoption of advanced technology, access to technical training, and the opening of international markets like the United Arab Emirates (UAE) and the United States of America (USA) [5]. Additionally, industry associations and other stakeholders have provided training and support to producers and exporters, focusing on meeting international standards for food safety and traceability to enhance the quality of Kenyan horticultural produce.

Despite challenges posed by the COVID-19 pandemic, the horticulture sector in Kenya has demonstrated significant growth in both value and volume of production over the years. In 2020, export earnings reached Ksh. 151 billion, with flowers accounting for KShs 108B, fruits KShs 18B, and vegetables KShs 24B [5]. However, a considerable portion of these earnings went towards air freights, impacting expected profits for producers and exporters [9]. Market participation by smallholder farmers in developing countries faces internal and external constraints, affecting the intensity of their involvement [10]. Factors such as product quality, supply consistency, and ability to meet market standards and deadlines influence farmers’ decisions on market participation and outlet selection [11] [12]. Adherence to stringent market standards has increased the need for value addition to maintain product quality, especially for perishable horticultural products [7]. Internal factors such as low literacy levels, small land sizes, and limited access to credit often hinder smallholder farmers’ participation in markets [13]. Additionally, subsistence agriculture dominance and high transaction costs further limit their engagement in agricultural markets [14] [15].

The liberalization of Kenya’s agricultural sector in the early 1990s led to a free market policy, increasing private sector participation and widening marketing channel alternatives for producers [16]. However, the proliferation of informal marketing channels following market liberalization has introduced challenges such as arbitrary price setting, disadvantaging farmers [17]. Vegetable production, particularly carrots (Daucus carota), plays a vital role in human diets worldwide due to their nutritional value and health benefits [18] [19]. Carrots are rich in vitamins and antioxidants and have gained popularity for their various health benefits, contributing to their increased consumption [20] [21]. Despite their nutritional value, challenges such as post-harvest losses and market access hinder the full potential of carrot production in contributing to food security and farmer livelihoods [19] [22].

Cultivation of vegetables, notably carrots (Daucus carota), holds significant value in regions with cooler climates and is deeply ingrained in global dietary practices. Carrots are esteemed for their abundant carotene, vitamins A, B, and C, historically renowned for their purported benefits in enhancing eyesight, reducing cholesterol, and aiding digestion. Versatile in use, carrot roots are consumed raw or cooked, alone or as ingredients in various culinary dishes. The surge in carrot consumption is attributed to its recognized antioxidant, anti-carcinogenic, anti-diabetic, anti-inflammatory properties, and dietary fiber content. Under optimal conditions, mature carrots can maintain quality for 100 - 150 days when stored appropriately. Despite the nutritional and economic potential of carrot production, smallholder farmers encounter internal and external constraints in accessing horticultural export markets [18]. Stringent regulations necessitate value addition to mitigate losses due to product perishability, posing challenges for farmers with limited resources. Internal factors such as low literacy rates, land sizes, asset values, and access to credit further impede market participation [23].

In Nakuru County, Kenya, smallholder carrot farmers navigated a complex web of market pathways in their pursuit of sustainable livelihoods. In particular, carrot production represents a crucial component of the county’s agricultural landscape, contributing significantly to both local food security and economic prosperity. However, the efficiency and inclusivity of carrot value chains remained central concerns for policymakers and development practitioners seeking to enhance market access and improve the welfare of farming communities. The decision-making processes of smallholder carrot farmers regarding market participation and outlet selection were multifaceted, influenced by a myriad of factors ranging from household characteristics to institutional dynamics. Understanding the intricacies of carrot value chains and farmer decision-making processes was crucial for designing interventions to strengthen market linkages and enhance rural economies’ resilience. This study aimed to unravel the complex dynamics of carrot value chains in Nakuru County, Kenya, focusing on smallholder farmers’ market outlet selection. Employing a multidisciplinary approach grounded in economic theory and livelihood frameworks, the research provided actionable insights into carrot markets’ functioning and determinants of farmer behavior within these chains. The rationale stemmed from the urgent need to improve the efficiency, inclusivity, and sustainability of carrot value chains in Nakuru County, addressing existing knowledge gaps and informing evidence-based policy interventions for inclusive agricultural growth and poverty reduction. Using rigorous quantitative methods like the Multi-nomial Logit Model (MNL) and market margin analysis, the study aimed to offer robust empirical evidence guiding policymakers, development practitioners, and stakeholders in devising targeted strategies to optimize carrot value chains in Nakuru County, contributing to the establishment of resilient, inclusive, and sustainable agricultural systems benefiting both farmers and consumers.

2. Methodology

2.1. Study Area

The study was conducted primarily during the 2020/2021 cropping season in Njoro Sub-County (Appendix 1), located within Nakuru County, Kenya, positioned approximately between latitudes −0.2917 and −0.3326, and longitudes 35.9847 and 36.0007. Njoro Sub-County is widely recognized for its agricultural activities, particularly in horticulture, including the cultivation of carrots, maize, and other crops. With an average altitude ranging from 1520 m to 3098 m above sea level and annual rainfall varying from 100 mm to 1900 mm, the climatic conditions in Njoro Sub-County are conducive to diverse agricultural production. Furthermore, as the host to Egerton University, one of Kenya’s prominent institutions of higher learning, Njoro Sub-County significantly contributes to educational and socio-economic development in the region. By concentrating on Njoro Sub-County as the primary research area, the study aimed to delve into the intricacies of carrot value chains and farmer decision-making processes within this specific agricultural landscape, providing nuanced insights into agricultural market dynamics and livelihood strategies in Nakuru County.

2.2. Sampling, Data Collection and Analysis

The study adopted a comprehensive sampling approach proposed by [24] to delve into the dynamics of Nakuru County’s carrot industry and markets, which also included conducting gross margin analysis. Through consultation with the divisional agricultural officer of Mau-Narok Division, a sampling strategy was devised, resulting in the selection of 195 smallholder carrot farmers, and traders (20 brokers, 34 aggregators, 15 wholesalers, 10 exporters, and 20 retailers). Nakuru County, particularly Njoro sub-county, was identified for its significance in carrot production and its role as a potential market center, with a focus on its vibrant agricultural landscape and diverse market participation.

Structured questionnaires (Appendix 2 and Appendix 3) were utilized to collect data, emphasizing household, land, and institutional information from smallholder carrot farming households in Njoro sub-county. Various tools, including semi-structured questionnaires, focus group discussions (FGDs), and key informant interviews (KIIs), were employed to gain a comprehensive understanding of Nakuru’s carrot enterprise and markets. The multistage sampling technique ensured representation across various industry segments, with respondents randomly selected at the village level using a proportion-to-size sampling approach. Statistical and descriptive measures were applied to identify key market players, assess the prevalence and profitability of value chain functions, and create enterprise and market maps illustrating Nakuru’s carrot industry landscape. These maps underwent validation and refinement, supported by insights from FGDs and KIIs, which were thematically coded to highlight pivotal issues within the carrot enterprise and markets. The study deployed Statistical Package for Social Sciences (SPSS) and STATA software for data analysis, revealing insights into market dynamics. Data triangulation enriched understanding of the carrot enterprise’s operations, identified constraints and opportunities for value chain actors, and facilitated the development of strategies to enhance smallholder carrot farmers’ incomes. The findings informed tailored recommendations aimed at improving their welfare.

2.3. Limitation of the Study

One limitation of the study was its focus solely on smallholder farmers and market intermediaries within Nakuru County, which restricted the generalizability of the findings beyond this specific region. To counteract this limitation, the study explicitly stated the scope of its conclusions to Nakuru County, acknowledging the need for caution when applying the results to other contexts. Another limitation was the reliance on recall for collecting certain information, particularly when record-keeping practices were not prevalent among participants. This could have potentially compromised the accuracy of the data. To address this challenge, the study employed proactive measures such as proper probing techniques and cross-check questions during the survey process. These strategies aimed to validate and enhance the reliability of the collected data, despite the limitations associated with recall.

2.4. Multinomial Model Specification

Following the recommendations of [25], a multinomial logit model (MNL) was utilized to assess the impact of household characteristics, technical aspects, socio-economic factors, external influences, and institutional elements on the selection of marketing outlets. The probability of a carrot farmer selecting one market outlet over another, given alternative options, was determined using this model.

Prob( Y J =i )= P ij = exp( X j β j ) exp( X j β k ) (1)

where YJ is the the probability with which a smallholder carrot farmer j chose market outlet i, that is Pr( Y J =i ) and i represents the marketing channel choices. Pij takes values 1, 2, 3, 4 and 5 each representing choice of marketing outlet: neighbour = 0, broker = 1, cooperative = 2, exporter = 3, Local trader = 4, 5, while Xi are factors affecting the choice of a marketing outlet, β were parameters to be estimated and e is random error term.

Therefore, with j alternative choices, probability of choosing a marketing outlet j is given by,

Prob( Y i =j )= e zj k=0 j e zk (2)

Zj is market channel outlet chosen [26] and is given by,

Z j = B j X i (3)

Zk is alternative choice that could be chosen [26] given by

Z k = β k X i (4)

The model estimates are used to determine the probability of choice of a market outlet j given factors that affect the choice, Xi.

With a number of alternative choices log odds ratio is computed as,

ln( P ij P ik )=α+ X i ( B j B k ) +e (5)

Pij and Pik are probabilities that a smallholder carrot farmer will choose a given channel and alternative outlet, respectively.

ln( P ij P ik ) is a natural log of probability of choice j relative to probability for

choice k, α is a constant, β is a matrix of parameters that reflect the impact of changes in X on probability of choosing a given channel. e is the error term that is independent and normally distributed with a mean zero N(0, σ).

Marginal effects of the attributes on choice are determined by getting the differential of probability of a given choice:

Prob( Y i =j )= e zj k=0 j e zk (6)

Marginal effects

δ= P i X i = p i ( B j k=0 j P k β k )= P i ( β j β ) (7)

Every sub-vector of β enters every marginal effect both through probabilities and through weighted average. The econometric specification for the multinomial model is indicated below, however the variables descriptions as its parametric measurements as used in multinomial logit (MNL) model are placed in Appendix 4.

Market outlet= β 0 + β 1 Gender_producer+ β 2 Age producer + β 3 Education producer + β 4 Household size+ β 5 land size+ β 6 Access capital + β 7 Acess information + β 8 Farmr group+ β 9 means of transport + β 10 extension-contact+ β 11 experience+ B 12 output price + B 13 Distance tarmac + ε i (8)

2.5. Estimation Specification of Carrot Marketing Margins

Market margins play a crucial role in understanding the economic dynamics of agro-based products along the value chain. To estimate these margins, economists employ econometric techniques that analyze price differentials (ΔP) between various stages of production and consumption. As proposed by [27], the market margin analysis offers the best tools to analyze the performance of a market outlet/channel, and the estimation specification involves a formulaic representation as follows:

Producers'share= Producer price Next actor price =1 Marketing Margin Actor price (9)

where the marketing margin will be taken as the difference between the producer’s price and the next market actor price.

GMM= Actor priceProducer price Actor price ×100 (10)

where GMMis the gross marketing margin, hence, the gross marketing margin of producers represents the share of the price paid by market actors allocated to the producer’s income. Conversely, the Net Marketing Margin (NMM) indicates the percentage of the final price obtained by the intermediary as income after subtracting marketing costs. Through the NMM, the allocative efficiency of the market outlets can be assessed. A higher NMM signifies diminished and inequitable income distribution, thereby dampening market participation by smallholder farmers.

NMM= Gross Marketing MarginMarketing costs Actor price (11)

The marketing margin at a given stage “i (GMMi) will be computed as:

GMM i = Next actor pricePurchasing price Next actors' priceFarmer' sprice ×100 (12)

The total gross profit margin (TGPM) will be computed as:

TGPM=TGMMTOE (13)

where TGMM = Consumer’s price − Farmers price

TOE = Total operating expenses

The profit margin at stage “i” is given as:

Gross profit margin( GPM ) = Gross Market Margin iOperating expenses i Total gross profit margin ×100 (14)

3. Results and Discussions

3.1. Descriptive Statistics

The results presented in Table 1 showcased variations in key metrics among surveyed households. The average household size ranged from five to six members, with a majority (56%) benefiting from extension services. Approximately half of the carrot farmers reported membership in farmer groups, predominantly led by males (71%), averaging 45.1 years in age and holding an average of 9.39 years of education. Carrot production was typically undertaken on an average land size of 1.73 acres, indicating a predominantly smallholder farming demographic. Farmers were situated an average distance of 14.95 kilometers from carrot cleaning points and traveled approximately 9.54 kilometers to reach the

Table 1. Descriptive statistics by carrot market participants and non-participants.

Variable

Market Participants

(n = 157)

Non-market Participants

(n = 38)

Overall Mean

Test statistics

Mean

Std. Err.

Mean

Std. Err.

Chi2 test

t-test

Household Size

5.91

0.190

5.05

0.399

5.74

-

0.052

Gender

0.24

0.031

0.19

0.079

0.29

0.195

-

Age (Years)

45.57

1.002

42.97

2.224

45.06

-

0.766

Education (Years)

10.59

0.238

4.47

0.339

9.39

-

4.047**

Experience (Years)

10.67

0.538

4.71

0.762

9.18


2.761*

Land size (Acres)

3.41

0.502

3.44

0.578

3.42

-

0.052

Carrot land size (Acres)

2.08

0.210

0.30

0.019

1.73

-

15.996***

Distance to cleaning point (Km)

13.81

0.512

19.68

1.301

14.95

-

5.934**

Distance to local market (Km)

8.80

0.897

12.59

2.433

9.54

-

5.126**

Access to extension services

0.17

0.027

0.25

0.131

0.56

11.963***

-

Access to credit services

0.06

0.017

0.08

0.083

0.12

40.497***

-

Member to carrot farmer group

0.21

0.030

0.27

0.089

0.50

60.686***

-

Member to other farmers groups

0.32

0.034

0.38

0.097

0.50

31.686***

-

***p < 0.01, **p < 0.05, *p < 0.10.

nearest market. Access to credit services was limited, with only 12% of households utilizing such services, possibly hindering adoption of advanced production technologies like irrigation. Furthermore, respondents were queried about their carrot sales during the 2019/2020 production and marketing season, including details on market outlets and buyers involved.

Moreover, the findings revealed that a significant majority (81%) of surveyed farmers participated in selling their produce through various outlets, notably the farm gate (29.94%), cleaning point (25.48%), local market (21.02%), external market (15.92%), and export market (7.64%). Consumers, brokers, aggregators, wholesalers, and retailers emerged as primary purchasers of carrots originating from Nakuru County, with aggregators notably acquiring 33.76% of produce directly from farmers across multiple market outlets. Additionally, smallholder carrot farmers sold 27.39% of their produce to brokers, 18.47% to wholesalers, 15.92% to retailers, and 4.46% to consumers, indicating diverse transactional patterns across various market outlets.

3.2. Factors Influencing the Choice of Marketing Outlet

In this study, the Multinomial Logit (MNL) model was employed to scrutinize the factors influencing the choice of marketing outlets among carrot farmers in Nakuru County. The selection of this model was based on the understanding that data related to market outlet preferences for carrot production are context-specific, with each independent variable having a unique value for each case. Furthermore, the MNL model operates under the assumption that the dependent variable (chosen market outlet) cannot be precisely predicted from the independent variables for any given case. The analysis encompassed various independent variables, including gender, age, education level, distance to the market, land size, years of experience, land allocated to carrots, household size, access to credit, membership in carrot groups, and distance to the carrot cleaning point. Upon analyzing the MNL results, as illustrated in Table 2. Gender played a significant role in the choice of market outlets, particularly affecting the cleaning point and local market preferences. Male-headed households were less inclined to sell carrots at cleaning points by 6.75% but showed a higher likelihood (12.92%) of selling at the local market compared to female-headed households. This divergence may arise from men’s propensity for risk-taking behavior, leading them to actively seek markets rather than settling for the less competitive cleaning point. Conversely, female-headed households may prioritize convenience over market competitiveness due to time constraints, opting to sell closer to home. These findings resonate with previous studies by [28] and [29], highlighting gender disparities in market access. Age also emerged as a significant factor influencing market outlet choice, particularly favoring the farm gate and local market. Older farmers exhibited a higher likelihood (approximately 1%) of selling at both outlets, possibly due to their risk-averse nature, preferring traditional markets for their stability. This aligns with prior research by [30] and [31], which

Table 2. MNL model estimates of factors influencing the choice of marketing outlet among carrot farmers.

Variable

Farm Gate

Local Market

Cleaning Point

External Market

Export Market

Gender

−0.0221 (0.0652)

0.1292 (0.0683)*

−0.0675 (0.0387)*

0.0313 (0.0521)

−0.0709 (0.0440)

Age

0.0066 (0.0023)***

0.0065 (0.0025)***

−0.0020 (0.0019)

−0.0054 (0.0033)

−0.0057 (0.0036)

Education level

−0.0013 (0.0096)

0.0087 (0.0091)

−0.0055 (0.0066)

−0.0071 (0.0094)

0.0052 (0.0059

Market distance

0.0189 (0.0027)***

−0.0261 (0.0048)***

0.0007 (0.0018)

0.0078 (0.0025)***

−0.0013 (0.0026)

Land size owned

−0.0344 (0.0244)

−0.0023 (0.0223)

0.0246 (0.0098)**

0.0188 (0.0109)*

−0.0068 (0.0095)

Experience

−0.0118 (0.0070)*

−0.0237 (0.0066)***

0.0064 (0.0040)

0.0193 (0.0038)***

0.0097 (0.0037)***

Carrot land size

0.0047 (0.0248)

0.0085 (0.0257)

−0.0434 (0.0155)***

0.0074 (0.0145)

0.0227 (0.0094)**

Household size

0.0014 (0.0126)

−0.0190 (0.0123)

0.0069 (0.0073)

0.0236 (0.0120)**

−0.0130 (0.0138)

Credit access

0.0672 (9.9907)

−0.1161 (11.9313)

−0.0983 (7.1147)

−0.3839 (42.5183)

0.5311 (71.5543)

Carrot Group membership

−0.2287 (28.9551)

−0.2210 (27.4112)

−0.3381 (11.0788)

1.0951 (96.7134)

−0.3073 (29.2691)

Cleaning point Distance

0.0159 (0.0041)***

0.0243 (0.0038)***

−0.0574 (0.0053)***

0.0112 (0.0037)**

0.0060 (0.0032)*

Regression diagnostics for MNL model

Number of observations

157





LR chi2 (44)

299.28





Prob > chi2

0.0000





Log likelihood

−90.001855





Pseudo R2

0.6244





***p < 0.01; **p < 0.05, *p < 0.1. (Standard errors in parentheses).

emphasized the age-related preference for traditional markets. However, [32] observed different trends, indicating the complexity of market dynamics across agricultural contexts. Furthermore, geographical proximity significantly affected market outlet choices, with increased distance leading to varied preferences among the farm gate, local market, and external market. For every 1-kilometer increase in distance, there was a 2% rise in the likelihood of selling at the farm gate, a 2.67% decrease at the local market, and a 1% increase at the external market. These findings align with [33] observations on the impact of distance on market choices, emphasizing the importance of minimizing transportation costs.

Moreover, land size owned by households influenced market outlet preferences, particularly favoring cleaning points and external market outlets. An increase of 1 acre corresponded to a 2.46% increase in selling at cleaning points and a 1.88% increase at external market outlets. This suggests a shift towards market-oriented farming practices with larger landholdings. Similar trends were observed regarding farming experience, with experienced farmers exhibiting a higher likelihood of accessing formal market outlets such as the external market and export market. These findings corroborate [34] observations on the positive impact of farming experience on market access. The size of land allocated to carrot cultivation and household size also influenced market outlet choices. An increase in carrot land size by 1 acre resulted in a 4.34% decrease in selling at cleaning points and a 2.27% increase at export market outlets. Additionally, household size had a significant positive influence on external market outlets, with a 1-member increase corresponding to a 2.34% rise in selling at these outlets. These findings contrast with [35] observations on household size’s negative impact on market outlet choice for tomato producers. Finally, distance to the cleaning point positively influenced all market outlet choices, indicating that proximity to cleaning points influences farmers’ decisions, with greater distances leading to varied preferences among the available options.

3.3. Gross Margin Analysis along the Carrot Value Chain

The examination of gross margins within the carrot value chain in Nakuru County provides critical insights into the economic viability and operational dynamics of carrot farming and marketing activities. As depicted in Table 3, the presence of positive average gross margins across all market outlets signals the potential profitability of carrot cultivation in the region [33]. Particularly striking is the observation of higher average gross margins per acre in the export market, followed by the external market, local market, cleaning point, and farm gate. This pattern underscores the potential for farmers to maximize returns by targeting higher-value market segments such as export and external markets [36]. Additionally, the variation in gross margin ratios across different market outlets sheds light on the distribution of sales revenue among farmers after accounting for production and marketing costs. The lower ratio observed in the export market suggests that despite the prospects of higher revenue, a substantial portion is absorbed by operational expenses [37]. Moreover, the predominant role of brokers and aggregators as key buyers at the farm gate and cleaning point, respectively, highlights the importance of engaging with formal traders to optimize returns, as evidenced by comparatively higher profits compared to direct sales [38].

Table 4 provides a breakdown of gross margins for various market intermediaries, revealing significant profits per unit of carrots sold and indicating potential market influence. However, the disparities in margins between traders and farmers underscore the need to address challenges related to market concentration, price manipulation, and inefficiencies within the value chain [34]. To foster a more equitable and sustainable carrot industry in Nakuru County, interventions targeting the reduction of transaction costs, improvement of market access, and enhancement of farmers’ capacity is imperative [27] [29]. These measures are essential for creating an inclusive and resilient market environment that benefits all stakeholders involved in the carrot value chain.

3.4. Challenges and Opportunities along the Carrot Value Chain

In-depth field studies and interviews with carrot producers in Nakuru County, Kenya, have unveiled a myriad of challenges and opportunities inherent in carrot

Table 3. Carrot producers’ Gross margin analysis.

Carrot producers’ Gross margin analysis per Acre (KES.)

Market outlet

Farm gate

Cleaning point

Local market

External market

Export market

Revenue (per acre)

95 Bags @ 800

95 Bags @ 1,300

95 Bags @ 1,500

95 Bags @ 1,800

95 Bags @ 2,500

Item

Amount (KES.)

Carrot sales

76,000

123,500

142,500

171,000

237,500

Total revenue

76,000

123,500

142,500

171,000

237,500

Variable Costs per Acre (KES.)

Inputs






Pre-planting herbicides

590

590

590

590

590

Seeds

4880

4880

4880

4880

4880

Post planting herbicides

1520

1520

1520

1520

1520

Pesticides cost

2120

2120

2120

2120

2120

Labour






Pre-planting herbicides labour

420

420

420

420

420

Ploughing

2450

2450

2450

2450

2450

Planting labour

540

540

540

540

540

Post-planting herbicides labour

450

450

450

450

450

Pesticide application labour

480

480

480

480

480

Weeding labour

3500

3500

3500

3500

3500

Harvesting labour

14,250

14,250

14,250

14,250

14,250

Transport to cleaning point

-

5700

5700

5700

5700

Loading and offloading cost

-

4,750

4750

3800

3800

Cleaning cost

-

14,250

14,250

14,250

14,250

Packaging bag cost

-

-

2850

2850

2850

Transport to local Market

-

-

4750

-

-

Loading and offloading cost

-

-

3800

-

-

Transport to external Market

-

-

-

-

-

Loading and offloading cost

-

-

-

-

-

Transport to export Market

-

-

-

-

57,000

Loading and offloading cost

-

-

-

-

9500

Total Variable costs

31,200

55,900

67,300

57,800

124,300

Gross Margin per Acre

44,800

67,600

75,200

113,200

113,200

Gross Margin per bag

471.58

711.58

791.58

1191.58

1191.58

Operating ratio

0.41

0.45

0.47

0.34

0.52

Gross Margin ratio

0.59

0.55

0.53

0.66

0.48

Table 4. Gross margin analysis carrot value chain actors.

Market Actors Carrot Gross Margin Analysis (95 bags per Acre)

Market actors

Item

Broker (Middlemen)

Aggregators

Wholesalers

Exporters

Retailers

Unit Cost

Amount

Unit Cost

Amount

Unit Cost

Amount

Unit Cost

Amount

Unit Cost

Amount

Tota Revenue per Acre (95 bags)

Carrot Sales

1300

123,500

1800

171,000

2600

247,000

3150

299,250

3200

304,000

Total Revenue


123,500


171,000


247,000


299,250


304,000

Variable Costs per Acre (95 bags)

Purchases

800

76,000

1300

123,500

1800

171,000

1800

171,000

2600

247,000

Transport to cleaning point

40

3800

-

-

-

-

-

-

-

-

Loading and offloading cost

40

3800

-

-

-

-

-

-

-

-

Cleaning cost

150

14,250

-

-

-

-

-

-

-

-

Packaging

30

2850

-

-

-

-

-

-

-

-

Charges/levies

30

2850

60

5700

80

7600

100

9500

100

9500

Transport to external Market

-

-

-

-

220

20,900

-

-

-

-

Loading and offloading cost (External market)

-

-

-

-

80

7,600

-

-

-

-

Transport to export Market

-

-

-

-

-

-

500

47,500

-

-

Loading and offloading cost (Export market)

-

-

-

-

-

-

100

9500

-

-

Total Variable Costs

-

103,550

-

129,200

-

207,100

-

237,500

-

256,500

Gross margin

-

19,950

-

41,800

-

39,900

-

61,750

-

47,500

Gross margin per bag

-

210

-

440

-

420

-

650

-

500

Operating ratio

-

0.84

-

0.76

-

0.84

-

0.79

-

0.84

cultivation, profoundly impacting decision-making processes. These insights align with the conceptual framework’s five categories of influence: endogenous influences of socio-economic characteristics, informational influences, experiential influences, and influences of relative change [39] [40] [41]. This section of the manuscript delves into carrot farming-specific issues within these categories, directly or indirectly shaping the decision-making of small-scale farmers regarding subsistence versus commercial farming and alternative crop choices. Key factors include farming and market experience, return on investment, relative production costs and pricing, farm size, information sources, and relative changes in economic conditions. Experiential and observational learning play pivotal roles in shaping farmers’ decisions, with efforts to enhance smallholding farm profitability potentially leading to a transition to commercial carrot farming. Currently perceived as a subsistence crop, carrots hold untapped potential as a cash crop, given their demand in both rural and urban markets. This paradigm shift could prompt a significant portion of the farming population to adopt carrot cultivation, driven by the prospect of increased profit margins due to competitive advantage, as suggested by [42]. However, the realization of this potential hinges on the success of pioneering farmers, rendering this behavioral shift speculative.

3.5. Strategies for Improving Decision-Making

In light of current research, addressing the complexities of improving carrot farmers’ decision-making processes remains a formidable challenge. Primarily, the predominant mode of carrot sales occurs through farmer trade, necessitating the implementation of various strategies to enhance backward linkages. Farmer organizations, notably cooperatives, emerge as pivotal actors in bridging smallholder farmers with markets [43] [44]. Contracting arrangements between farmers and buyers offer promising avenues to facilitate market access for smallholders in Kenya, fostering stronger ties between farmers and agribusiness entities. Furthermore, it enhanced produce quality and quantity, alongside reduced transaction costs through streamlined search and information dissemination, as well as minimized price negotiation efforts, which was similar to the suggestion of [45]. Notably, these contracts not only elevate and stabilize smallholder incomes but also enhance production techniques, crop quality, and access to essential resources such as credit and farm inputs. Additionally, to circumvent the inefficiencies and fragmentation prevalent in smallholder carrot markets, vertical integration strategies, such as group formation or collaboration to directly supply supermarkets, present viable alternatives. Crucially, the effectiveness of these strategies hinges on the presence of incentives guiding the decision-making process, with the optimal approach contingent on the socio-economic, political, and cultural context. Policy interventions aimed at enhancing smallholder market participation demand stakeholder engagement and a comprehensive understanding of the prevailing market structure. This proactive approach ensures the mitigation of unintended negative consequences and will be expounded upon in subsequent policy analysis sessions.

4. Conclusion and Recommendations

This study sheds light on the complex dynamics inherent in the carrot value chain in Nakuru County, Kenya, by delving into both the determinants influencing farmers’ choices among different market outlets and the analysis of gross margins along the value chain. The findings reveal that a substantial proportion (81%) of surveyed farmers actively participate in various market outlets, including the farm gate, cleaning point, local market, external market, and export market. Notably, key purchasers comprise aggregators, brokers, wholesalers, retailers, and consumers, with transactions predominantly conducted at the farm level. Moreover, the exploration of determinants unveils significant insights into the decision-making processes of smallholder farmers, underscoring the critical roles played by factors such as gender, age, distance to markets, land size, farming experience, and household characteristics. These insights underscore the multifaceted nature of market outlet selection and offer a nuanced understanding of the challenges and opportunities encountered by farmers in accessing diverse markets. Furthermore, the analysis of gross margins within the carrot value chain provides valuable economic insights, showcasing the potential profitability of carrot farming in the region. Particularly noteworthy are the higher average gross margins observed in export and external markets, signaling promising prospects for farmers focusing on these market segments. However, the existing disparities in profit distribution between farmers and traders emphasize the imperative for interventions aimed at fostering equitable value distribution along the value chain. Strategies geared towards reducing transaction costs, enhancing market access, and bolstering farmers’ capacity are indispensable for enhancing overall profitability and sustainability. Hence, the findings of this study contribute to a comprehensive understanding of the carrot value chain in Nakuru County, laying the groundwork for targeted interventions to enhance market access, elevate livelihoods, and promote sustainable agricultural development. Policymakers, development practitioners, and stakeholders can leverage these insights to devise tailored strategies that foster inclusive growth, resilience, and food security within the agricultural sector of the region. Through addressing identified constraints and harnessing opportunities, stakeholders can collaborate towards forging a more vibrant, inclusive, and sustainable carrot value chain that benefits both farmers and consumers alike.

Acknowledgements

The authors extend heartfelt appreciation to everyone who contributed to the successful completion of this study. They offer special thanks to the dedicated team, express gratitude to the carrot farmers in Nakuru County, Kenya, for their invaluable participation and insights, and acknowledge the efforts of the research assistants and field staff. Lastly, they recognize all contributors, whether directly or indirectly involved, for their roles in the research’s success. It’s important to note that the opinions expressed in this paper are solely those of the authors.

Appendix 1. Map of Study Area

Appendix 2.Producers/Farmers Questionnaire

Questionnaire Code__________

Name of Enumerator________________________________________________

Date of Interview______________________________

Division _____________________________________

Location _____________________________________

Sub-location __________________________________

Section A: Socio-Demographic

1. Respondent’s name __________________________________________

2. Fill the respondents’ relevant information where applicable in the table below.

Gender (Tick)

Age (Years)

Marital Status (Tick)

Household size

Male

Female

Single

Married

Separated

Divorced

















3. What is the highest level of education of the respondent? Fill in the number of years in each.


None

Primary

Secondary

College/Tertiary

University

Level (Tick)






No. of years attended






4. Are you the head of the household?1 = Yes 0 = No

5. If no please provide the information below regarding the household head

  • Name of Household Head _________________________________________

  • Fill the demographic characteristics of the household head in the tables below

  • Gender (Tick)

    Age (Years)

    Marital Status (Tick)

    Household size

    Male

    Female

    Single

    Married

    Separated

    Divorced

















Education level (years)

None

Primary

Secondary

College/Tertiary

University






6. When did you start carrot production? Please state the year you began. _______________

7. Please, fill the following table with the information regarding the household members.

No.

Name of household member

Relation to HH head.

0 = Head

1 = Spouse

3 = Brother/Sister

4 = Child

5 = other

Sex

1 = M

2 = F

Year of birth

Educational level 0 = None

1 = primary, 2 = secondary

3 = college/tertiary

4 = university

Experience in carrot production (Years)

1







2







3







4







5







6







Section B: Income Sources

8. Please list the top three sources of income for the household.

Income sources:TickRank

1 = Production/sale of crops

2 = Production/sale of livestock & livestock products

3 = Agricultural output trading,

4 = Agricultural input trading

5 = Salaried employment

6 = Casual laborer

7 = Pension

8 = Remittances (income from relatives/friends etc)

9. Others (specify)………………………………………..

Section C: Carrot Production

9. How much total land do you have? Please state in acres. ____________

10. Indicate the land tenure system on the land in use?________

1 = Communal 2 = Rented/lease 3 = Privately owned

11. If you do not own land, are you satisfied with the arrangement on the land that you are using? Explain

__________________________________________________________________________________________________________________________________________________________________________________________

12. How much of this land was under carrot last season? ___________________

13. Did you use any inputs (fertilizers, manure, pesticides) in carrot production last season?__

1 = Yes 0 = No


Input used

Quantity used

Place you get it

Distance (Km)

Cost (KES)

Reason for getting there

1







2







3







4







5







6







7







8







14. If yes which ones did you use and how much? KES______________

Section D: Carrot Market Participation

15. Do you participate in Carrot marketing?1 = Yes 0 = No

16. What is the main reason for selling carrots?

1 = I need cash for home consumption2 = I need money for input purchases

3 = I need money to pay school fees4 = I want to repay loan

5 = Other (Specify) _____________________

17. Do you perform price surveys, before selling? _____1 = Yes 0 = No

18. How do you rate the availability of labour used in carrot production? _____________

0 = unavailable 1 = easily available 2 = Available

19. How did you sell your carrots _________1 = individually 2 = through a group

20. Where was your point of sale (outlet)?

1 = Sold at home (Farm gate) 2 = Cleaning point3 = Local market (nearest market/town within the County)4 = External market (main markets/towns outside Nakuru County)5 = Export market (Markets outside Kenya)6 = Other (Specify) _____________

21. How is a price set during the sales? _________

1 = we negotiate 2 = It is market driven 3 = It is set by buyers4 = Other (Specify) ________________

22. State the buyer you use to sell your carrots, level of satisfaction and the most rewarding carrot channel in your area in the table below.

Outlet

Tick

Distance (KM)

Level of Satisfaction

Most Rewarding Channel

Tick

Satisfied

Less satisfied

Not satisfied

Consumers







Middlemen/Broker







Aggregators







Wholesalers







Retailers







Processor







Other (specify)…………..







23. In terms of the outlet, you use regularly, what are the main benefits? _________

1 = high prices 2 = understand the contract 3 = nearer4 = provide inputs

5 = come for produce in the farm6 = Other Specify………………………………..

24. What was the payment duration from your preferred buyer?

1 = cash on the spot 2 = 2 - 7 days3 = 8 - 14 days4 = 14 - 30 days5 = After 30 days

25. Do you have any contractual agreements or a guaranteed/ready market (formal or informal) with any agribusiness outlet e.g Hotels, Supermarkets etc? ________1 = Yes 0 = No

26. Do you have regular customers, who always buy from you? ________1 = Yes 0 = No

27. If Yes, how long have you been trading with these customers? ___________ years

28. Before selling your produce what value adding activities do you perform?

Activity

Cost per 90 kg bag

1 = Washing

2 = Packaging

3 = Processing

4 = Other (Specify) _______________

_1 = ____________

_2 = ___________

_3 = ___________

_4 = ___________

29. How much did you sell in the past season?__________(Kgs)

30. How much per kilogram did you get in KES_________

31. Have you ever declined a selling price and ended up not selling? ________1 = Yes 0 = No

32. What type of transport do you use?1 = Manpower 2 = Wheelbarrow 3 = Vehicle

4 = Donkey 5 = Other Specify_______________________

33. How much did you pay for transport in KES___________

34. What general problem do you experience when moving your carrots?

1 = Small size transport2 = Lack of transport means

3 = High transport cost4 = Other specify______________________

35. When selling, do you combine your carrots with that of other farmers? ______1 = Yes 0 = No

36. If no, state the main reason ______________

1 = you don’t sell at the same time2 = you don’t sell at the same market

3 = you have a conflict with them4 = Other (Specify) ____________________

37. Do you receive market information prior to sales? ___________1 = Yes 0 = No

38. If yes, what is/are your source(s) of information? ______________

1 = Radio 2 = TV 3 = Extension officers 4 = Extension publications

5 = Co-farmers 6 = Middlemen/women 7 = Development partners

8 = Other (Specify) ________________________

39. In what form would you like the price information to be delivered?

1 = Price per bag _____ 2 = Price per kilogram ____3 = Other (Specify)_______________

40. Do you receive extension services?1 = Yes ____ 0 = No_____

If Yes, How many times did they visit in a production and marketing season?

1 = Once 2 = Twice 3 = Three 4 = More than three ___________

41. What services does he/she provide?_________

1 = Advise on crop husbandry2 = Advise on carrot marketing3 = Advice on record keeping

4 = Advice on good variety5 = Other (Specify) ________________

42. Did you access any credit financial services in the last production season? _____1 = Yes 0 = No

If yes, name the source

1 = Commercial banks_______2 = AFC ______3 = Agricultural cooperatives___

4 = Credit unions (merry-go-round) 5 = Family and friends

6 = Other (Specify) ___________________________________

43. Has anyone in the household attend a farmers training last year?1 = Yes ____ 0 = No_____

If yes, how many times for the whole year? _______________

44. What was the training about? _____________

1 = Soil erosion2 = Fertilizer/input use3 = Carrot production and marketing

4 = Safety and quality standards5 = record keeping6 = Other (Specify) _____________

45. Does any member of the household belong to a local or external organization?1 = Yes 0 = No

46. If yes, what type of group? ________________

1 = Self-help group 2 = Welfare group 3 = Cooperative society4 = Other (Specify) __________

47. What are the main activities of the group? _________

1 = Farming2 = Business 3 = Advocacy4 = Other (Specify) ____________

48. List what you consider to be the major problems you face in marketing your carrots

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

49. Suggest ways in which such problems can be addressed

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Appendix 3. Traders Questionnaire

1. Name of business enterprise_______________________________________

2. Type of trader_______ {1} Rural broker {2} Aggregator {3} Wholesaler {4} Exporter {5} Retailer {6} Other [specify} ____________________

3. Location province ________

{1} Coast {2} Eastern {3} North Eastern {4} Central {5} Rift Valley {6} Nairobi{7} Nyanza {8} Western {9} Outside Kenya

4. District: ________________________

5. Division:________________________

6. Location: ___________________________

7. Sub-location: _______________________

8. Market/town _________________________________________

9. Address of the business enterprise __________________ Postal code ___________

10. TEL. ________________________

11. E-Mail __________________________________________

12. Name of respondent: ___________________________ Date ________________

13. Gender of respondent _______{1} Male {2} Female

14. Age of the respondent _________ (Year of Birth…………..)

15. Name of business owner: _____________________: gender _____ {1} Male {2} Female

16. Relationship of respondent to the owner of business:_______

{1} Self {2} Spouse {3} Son {4} Daughter {5} Other Relatives

17. Position of respondent in the business. _______

{1} Owner {2} Hired manager {3} Other [specify] ____________________

18. Main occupation of respondent ___________

{1} Farming {2} Employed {3} Self employed {4} Others Specify__________________

19. Level of education? ________1. Primary 2. Secondary 3. Tertiary

20. What variety of carrots do you trade in?


Variety

Reason

Quantity per month

Selling price per unit (KES)

Buying price per unit (KES)

1






2






3






4






5






21. Where did you source the produce from between Jan – Dec 2017?

Month bought

Variety

Quantity sourced (Kg)

Price (KES/Kg)

Source
1. Local Shops2. Super markets3. Middlemen4. Local marketvendors5. Exporters6. Processors7. Major towns8. Other specify_____________

Distance to source (Km)

Mode of transport
1. Donkey2. Camel3. Pick-up4. Lorry5. Wheel burrow6. Hand cut7. Oxen8. Manpower9. Other specify______

Actual transport cost (KES)

Jan








Feb








March








April








May








Jun








Jul








Aug








Sept








Oct








Nov








Dec
















22. Where did you sell your product to?

Month sold

Variety

Quantity sold (Kg)

Price (KES/Kg)

Buyer
1. Consumers

2. Aggregators3. wholesellors4. Exporters5. Processors6. Retailers 7. Other specify___________

Distance to selling point (Km)

Mode of transport 1. Donkey2. Camel3. Pick-up4. Lorry5. Wheel burrow6. Hand cut7. Oxen8. Manpower9. Otherspecify
______

Actual transport cost including sale tax

(KES)

Jan








Feb








March








April








May








Jun








Jul








Aug








Sept








Oct








Nov








Dec
















23. For how long have you been trading in the following?___________ (Years)

24. Did you access any credit financial services for carrot trading?______1 = Yes0 = No

25. If yes, name the source

1 = Commercial banks 2 = AFC3 = Agricultural cooperatives

4 = Credit unions (Merry-go-round)5 = Family and friends6 = Other (Specify) _______________

26. Are you aware of any quality standards in the carrot trading? _____1 = Yes0 = No

If yes, which ones?_____________________________________________

27. Do you follow any standards/regulation in the trading of carrots

28. Please provide estimates of the costs that you incur in your carrot business?

Cost item per bag of carrot

Number of times incurred per month

Amount KES

Transport



Information sourcing



Licensing



Cess



Permit



Insurance



Training



Marketing



Packaging



Others (specify)



29. What major problems do you encounter in carrot trading?


Problem

Rank

Recommended Solution

1

Rejection of product



2

Spoilage and breakage



3

Lack of market



4

Transportation



5

Market information




Any others (specify)



Appendix 4. Description of Variable Used in Multinomial Logit (MNL) Model

Marketing outlet Choice (Dependent variable)

1 = Farm gate 2 = Cleaning point 3 = local Market 4 = External market 5 = Export Markets

Explanatory Variables

Code

Variable

Specification

Exp. Sign

GNDR

Gender

1 if male and 0 if female

+/−

AGE

Age

Age of household head in years

EDU-LVL

Education level

Number of years of formal education

+

HH_SIZE

Household size

Number of members of household

+

LAND_SZ

Total land size

Total land size available to household head

+

ACCESS-FIN

Access to financial capital

1 if household received loan and 0 otherwise

+

ACESS-INFO

Access to information through use of cell phones

1 if household owns a cell phone and 0 otherwise

+/−

GROUP

Farmer Association

1 if household belongs to a farmer association and 0 otherwise

+/−

CEL_OPERATOR

Existence of cell phone operators in the village

1 if there is existence of cell phone operators and 0 otherwise

+/−

MEAN_TRNPT

Means of transport

1 if household owns a motor and 0 otherwise

+/−

NO_EXTENSION

Number of contacts with extension agents

Number of times in a year

+

HH_LOCATION

Location of household

1 if household is located in rural area and 0 otherwise

+/−

EXP

Experience

Years

+

SP

Output price

Ghana cedi

DIST_TARMAC

Distance from farm to nearest tarred road

Distance in km from farm to nearest tarred road

TC

Total transaction cost

Total transaction cost in KES

Interactive terms

AGE_HH

Age of household head and phone access

Age of household head * Access to mobile phone

+

ACCESS_LOCATION

Access to cell phone and location of household head

Access to cell phone * Location of household head

+/−

Conflicts of Interest

The authors declare no conflicts of interest regarding the publication of this paper.

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