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Annual Report SR-CRSP SOCIOLOGY
Annual Report SR-CRSP SOCIOLOGY
The privatization efforts of the multiplication of the KDPG requires an understanding of the market conditions in which breeders will operate, as well as an assessment of the economic viability of this enterprise. As a first step towards this effort, the KDPG component developed a proposal for privatization that includes pricing and markets as an activity. A survey of the goat market in Kenya was carried out in September 1995. The main purpose of the survey was to derive indications of the levels at which the prices of KDPG does and bucks should be set. This was planned in August of 1995, along with other activities that will follow in the workplans for 1995-1996.
Formula pricing whose main elements are outlined below was found during the course of the survey. This formula was developed by the Integrated Small Livestock Project based in Nyeri district. It has been used to assist farmers to calculate the price of breeding animals for sale.
The main components of the formula are:
C = LW x Ksh/kg (LW is live weight in kg, Ksh/kg is the price of meat)
w1 = weight for phenotypic (appearance) factors, up to 0.1
w2 = weight for management, up to 0.1
w3 = weight for performance of mother, up to 0.1
w4 = weight for registered animals, up to 0.1
w5 = weight for breeding value of animal, up to 0.6
Price is a weighted sum of the slaughter value of the animal. This formula identifies all the important factors that contribute to the value of breeding stock. Live weight and breeding value (genotype) of an animal receive greater weight than other factors.
In government farms, prices are set by a disposal committee whose major criteria is current price of meat. By contrast, all private commercial breeders argued that prices are determined by supply and demand forces in the market. In some markets, the process of price discovery was effected through bidding in open livestock auctions.
Having considered both pricing at the market and formula pricing, it was recommended that KDPG does be priced within the KShs. 3000-4200 range while KDPG bucks be priced within the KShs 4000-4800 range. The lower limits of the ranges should define the floor prices. It should be observed that the market being analyzed was the output market for breeders, not the markets where they purchase their seed stock. Ceiling prices for KDPGs could be arbitrarily estimated by considering individual prices for each of the four constituent breeds. In this case, an estimate would be obtained by summing the prices and factoring the sum by four. Using this criteria, ceiling price for KDPG doe should be around Ksh 6000, while ceiling price for a KDPG buck should be around Ksh 7000. The prices recommended here are farm gate prices.
Two distinct markets were identified with the survey. The first, and arguably the larger one, is that where farmers buy their breeding stocks from. Most of the price information gathered during the market survey relates to this market. The second which is much smaller is that from which commercial breeders buy their breeding animals. Prices here are much higher because sometimes it involves importing elite animals from abroad or buying from a limited number of suppliers in the country. Another characteristic of the latter market is that animals dealt with are the more popular breeds with an established record and demand. When considering what the ceiling prices for a KDPG doe and buck should be, it would be important to consider prices prevailing in the second market.
While the KDPGs could be sold at higher prices than the ones recommended here, it should be noted that the KDPG is a new breed, particulars of which farmers do not know. Farmers need to evaluate the performance of the KDPG on their own farms to be able to accept premium prices.
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