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 lndanga@purdue.edu

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!

Questions?