Structure, Conduct, and Performance of Kisumu Fish Marketing System

Abstract

The study analyzed the structure, conduct and performance of Kisumu fish marketing system, with the aim of understanding the organization of the market, the role of marketing middlemen, their capital outlay, costs and returns and how these relate to consumer price of fish. The study also assessed sources of supplv of fish and the respective distribution channels. Three areas of the fish marketing system were focused on. First, the structure of the market was analyzed in four aspects, namely: market concentration, product differentiation, market integration and conditions of entry into the fish business. Market conduct was analysed by measuring the degree of collusion among traders in making market decisions. Finally. market performance was evaluated bv looking at the cost structures of the various fish types sold in Kisumu and relating the traders’ gross margins to the consumer prices, the marketing margins and the opportunity cost of the traders’ entrepreneurship. The study used primary data obtained bv interviewing 53 wholesalers and 98 retailers of different types of fish in Kisumu metropolitan urban area in March to May 1991. A stratified random sampling technique was used in selecting the sample while data was analyzed using SPSS and Harvard Graphics computer packages. It was found that Lake Victoria and Lake Turkana supplied the fish sold in Kisumu. The largest 9% and 17% wholesalers (representing the largest 4 and 8 wholesale traders) handled 30% and 43% of the wholesale market sales. The same percentages of retailers controlled 32% and 48% respectively of the retail market sales. The wholesale market had a Gini coefficient of 0.37 while that of the retail market was 0.45. Based on this, the wholesale market has been categorized as competitive and the retail market as oligopolistic. There was product differentiation in the market and very little formal vertical market integration. Instead the traders commonly established trade contracts to ensure reliable fish supplies. The only notable barrier to entry into the fish trade was lack of suitable market space for new traders. While traders did not collude among themselves to decide fish prices or control sales volumes, one aspect of collusion noted was among wholesalers whereby they were barred from serving consumers directly, even where this was convenient. The traders’ gross margins constituted between 17% and 42% of the consumer price of the different fish types. The net incomes to traders were higher than the traders’ opportunity cost for entrepreneurship, indicating that the incomes, hence gross margins, were excessive. In conclusion, the fish market had factors which favour imperfect competition, especialIv at the retail level. The resulting market prices were inefficient since they contained excessive trader remunerations and therefore did not reflect the costs of providing the market ing services.