Factors influencing the prices of non-seasonal agricultural produce (fruits and vegetables) - a case study of ongata rongai

Abstract

Kenya's economy is predominantly agriculture based where majority of the people deriving their livelihood from agriculture are based in the informal sector, which has recorded a dramatic and sustained expansion during the last decade, but despite the expansion in informal sector employment, the proportion of people living below the poverty line has continued to increase during this period. It has been discovered that the earnings by the informal sector traders, majority of who are hawkers are typically low and often not enough to push people out of poverty. In view of the fact that pricing plays a major role in determining the profit margin of traders, it is vital that prices be set in a manner that will ensure that traders live above the poverty line. This study aims to investigate the non-seasonal Agricultural produce market in the case study area with a view to finding out what determines the prices charged on commodities. This is because prices affect the economic welfare of the traders directly since the profit margin of the traders in the informal sector has a direct bearing on economic welfare. The study involves the use of a structured questionnaire to interview traders dealing in non-seasonal agricultural produce in the area of study with a view to finding out what determines the pricing of their products. The study revealed that the major determinant of prices is weather, such that there exists two separate and distinct sets of prices commodities depending to the prevailing '" weather akin to the cobweb model. Other significant a~inants were; the total output from small-scale farmers in the region, the economic status of buyers in the region, total costs per unit of produce and the location of the business. In order to reduce the adverse effect of hostile weather upon prices and in effect upon the economic welfare of traders, it is necessary to improve on infrastructure in the market places to make the market stalls waterproof as well as roads in the rural areas to facilitate enhanced transportation and minimize on losses