Economic sustainability in the floriculture value chain in Kenya
Date
2022
Authors
Njogu, George M.
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
This study analyzed the value addition process in floricultural value chain among small scale, medium and large scale producers in Central Kenya. The analysis took an evaluative process and assessed the conversion of inputs to outputs by employing resources that add value during the production process. Value chain in agribusiness is a continuum which starts from the point of production where inputs are sourced and used by actors to facilitate basic agricultural production, activities and successive input from other stakeholders such that in each process step, value is added until the product reaches the end consumer. The objective of this study was to conduct an in-depth analysis of floriculture value chains and their economic sustainability in Kenya. The research used a mixed method approach using quantitative and qualitative data. A sample of 103 small scale, medium scale and large-scale firms was drawn from a population of 179 Kenya Flower Council members. A questionnaire was used to collect general firm data, production data, supply chain strategies and challenges along the floriculture value chains. Data was tabulated, classified, cleaned then analyzed using tables, charts, graphs and other statistical tools. The results showed that supply chain strategies had variable effects on economic performance. The study established that firms that used direct/mass market made higher returns than those that used auctioneers and therefore better positioned towards achieving economic sustainability. There was a strong correlation between marginal cost and economic performance. Despite the significant correlation between the two variables, marginal cost alone was not a good predictor of performance and economic sustainability of floriculture firms in Kenya. However, the utilization of economies of scale in horizontal integration yielded lower marginal costs. In particular, the utilization of performance management as a tool was statistically significant in enhancing marginal cost effect for improved economic performance of floriculture industry in Kenya. The study identified freight cost of floricultural products as the major value chain constrain that had significant effect on performance of floriculture industry economic sustainability. The researcher suggested a need for firms to utilize the opportunity in mass/direct markets, mainstream performance management tool, jointly lobby and seek alternatives to airfreight in order to cement a trajectory for economically sustainable floriculture value chains.
Description
A Dissertation submitted in partial fulfillment for the award of the degree of Master of Management in Agribusiness, Strathmore University
Keywords
Value chain, Agribusiness, Floriculture, Economics, Sustainability