Value Chain Analysis of Processed Commom Bean Products in Kenya

Abstract

The common beans industry in East Africa is characterized by under developed markets with low value addition and a lesser amount of commercialization to the beans value chain as a whole. The study aimed at analyzing the processed beans value chain in Kenya focusing on its structure, conduct of its players and their market performance. The study used data from 159 randomly selected farmers, 90 randomly selected bean grain traders and also involved data from purposively selected 90 processed bean distributors, 19 bean grain processors and 36 processed bean consumers. Data was partly analyzed by use of descriptive statistics to map out the key value chain actors, concentration ratios and barriers to market entry and exit were used to determine its structure while marketing margin analysis were important in determining the performance of the actors in this value chain. Multiple OLS regressions were run at each stage to determine the factors that affect the performance of the processed bean value chain actors. Results revealed that the value chain of processed bean products in Kenya is complex with inter-twined channels of product flow and minimal external interventions. The structure of the processed bean value chain exhibited tendencies of perfect competition at bean grain supply and product distribution stages with very strong oligopolistic tendencies at the processing stage. High initial capital and limited access to market related services were the major barriers to market entry in the processed bean value chain. Marketing margins were highest at the processing stage. Quantities handled and experience in bean trade affected the marketing margins received by the bean traders while yield was found to significantly influence marketing margins of farmers. Government and external support through tax exemptions for processors in the processed bean business and enticements like free media commercials, encouragement of contractual arrangements between farmers and processors are recommended