DETERMINANTS OF CONSUMER’S CHOICE AND POTENTIAL WILLINGNESS

TO PAY HIGHER PRICES: A PEARL MILLET CASE STUDY IN KENYA

OKECH, S.O., NGIGI, M. AND KIMURTO, P.K.

MBEERE DISTRICT

INTRODUCTION

• Millets 4th important cereal in cultivation and production in the tropics

•Coverage 15 and 12 m ha (Africa and Asia)

• Pearl Millet (Major): Merits;•Hot and dry conditions (200-600 mm p.a);

•Requires 25% less rainfall

•Diet >500 m households;

•Feed source

•Fuel and ethanol production

INTRODUCTION CONT’D

•Marketing challenges; •Poorly developed and fragmented markets with weak value chains, •High assembly and processing costs, •Uncompetitive grain prices, •Lack of market information• Limited processing facilities, •Lags in legal and policy framework

KENYA • Yield/Ha decline1,610 kg in (1980) to 200-800 kg (2008) - potential of 1,500-3,000 kg ha-1

INTRODUCTION CONT’D

•Promotional efforts: • Non-traditional crops project - acceptability and consumption (GoK)

• EPHTFC project-income and food security (IFAD & GoK)

• HOPE project- productivity and marketing challenges (ICRISAT)

• INTSORMIL/B&M Gates - millets and sorghum production and marketing ESA

• ASARECA pearl millet productivity project

•However, •<3% pearl millet enters formal production channels•2 m tons pearl millet is fed to animals compared to 30 m tons of sorghum

GENERAL OBJECTIVE

•To contribute towards the competitiveness and enhancement of market access of pearl millet for the benefit of the farming communities in Arid and Semi-Arid Lands of Kenya

Specific objective:• To determine consumers’ willingness to

pay for value added pearl millet products within markets - CVM

STUDY AREA: MBEERE DISTRICT

•A total area of 2,097KM2 ;Latitude 00 N and 00 N; Longitude 370 E and 370 E; Altitude -500-1200m above sea level

•Unreliable rainfall (640 – 1,110mm) with most parts receiving less than 750mm annually

•Average temperature; 20-300C and sometimes -above 300C (March- hottest month)

Dependent variable

Definition Expected sign

WTP (Willingness to Pay) If respondent is WTP a price premium for pearl millet products

1-Yes; 0- Otherwise 

Independent variables

 

Income (Income) What is monthly income level of a household head (Categorical)

+ 

Children (Nochildren) The number of children below 12 years in a household

+ 

Education (EducLevel) Highest educational level of the respondent (Categorical)

-

 

Gender (Gender) Gender of the decision maker (Dummy) +/- 

Employment (Employmentstatus) Is the household head employed (categorical)

+ 

Age (AgeofHH) Age of the decision maker (years) -

Household head (HHhead) If the buyer is the head of a household (Dummy)

+

Awareness (Awareness) The household head level of awareness of pearl millet value added product (Categorical)

+/_

Heard (HeardProduct) If a Household have heard of a pearl millet value added product (Categorical)

+

DATA ANALYSIS: NATURE AND A PRIORI EXPECTED SIGNS OF LOGIT MODEL

RESULT AND DISCUSSION Variables   Consumers

Mean age (years)   45.42 (11.74)

Educational level (%) Illiterate 5

  Primary 52

  Secondary 31

  Tertiary 9

  University 3

Gender (%) Male 61

  Female 39

Respondents Employment status

(%) Full time 18

  Part time 21

  Unemployed 55

  Housekeeper 4

  Retired 2

ESTIMATES OF MEAN WTP MODEL

Variable Coefficient

estimate

Standard

error

P- value

Constant (α) 9.235 1.662 0.000

Bid (ρ) 0.065 0.013 0.000

Mean WTP

(α/ρ)

142.077

Number of observations = 100; Log likelihood = -63.862;

(Bhatta et al., 2010 40-60% tomatoes; Loureiro and Umberger, 2003 (38-58% certified steak and Hamburger)

• On average wtp Kshs.142 represented a premium price of 42% over the base price of Kshs 100 of finger millet product.

ESTIMATED LOGIT MODEL RESULT

WTP Coeff Std error Z P>|z| Marginal

EffectsHHhead -0.555

0.716 -0.78 0.438 -0.056

AgeofHH 0.080 0.029 2.76 0.006* 0.008

Gender 1.252 0.728 1.72 0.086***

0.127

EducLevel -0.102 0.348 -0.29 0.769 -0.010

NoChildren 0.558

0.244 2.29 0.022** 0.057

Employment 0.238 0.277 0.86 0.390 0.024

Income 1.029 0.388 2.65 0.008* 0.105

Awareness 1.351 0.420 3.22

0.001* 0.138

HeardProduct 0.229 0.455 0.50 0.615 0.023

CONCLUSION

•Consumer WTP >42% price premium (income and HH composition and prior knowledge)

POLICY RECOMMENDATION

•Fast food marketers should be made aware of price premium to enable them adjust their marketing strategies (consumer classes)

THANK YOU END