Demand for soybeans: a case study of livestock feed industry in Nairobi, Kenya

Abstract

This study analyses the demand for soybean by livestock feed industry in Kenya over the period 19S0 - 200S. The main objective of the study was to determine the demand for soybeans by the livestock feed industry in Kenya. To achieve the objective, a log-linear demand function was estimated. The results showed that there exists a negative relationship between the demand of soybeans by livestock feed industry and its own price. There also exists negative relationship between the price of soybean and those of its substitutes. These results show that soybean, as an input in the livestock feed industry, is a normal good. The results show that for 1% increase in the price of soybean and the price of close substitutes; quantity demanded of soybean reduces by 0.73% and 6.S% respectively. The quantity demanded of soybean is found to be negatively related to availability of the commodity in the domestic market, indicating that the millers are ignorant of availability of soybeans in the domestic market for the purposes of milling. To improve on the performance of the industry; we suggest that there is need to enhance information flow between local small scale farmers and the existing feed industry, the government should improve on the energy and road infrastructure to reduce millers' cost of production, the millers should explore ways of improving on their efficiency to reduce cost of production and finally, a policy needs to be devised to consolidate the existing milling factories.