Role of Market Areas in Enterprise Choice: The Case of the Production of selected Vegetable Crops in Nakuru District, Kenya

Abstract

This study sought to know the problems facing producers with regard to enterprise choices that would maximize national objectives such as poverty reduction in rural areas, generation of employment, and generation of foreign exchange. Data was collected from both vegetable producers and traders. Vegetable producers were sampled using a two-stage cluster sampling procedure. A sample of 300 respondents was interviewed. The number of traders selected was 20 and this was the average number frequenting the market. In the analysis, locational price relationships were determined using spatial price equilibrium models. It determines the optimum or least cost trading patterns given the distances, transfer costs and the commodity produced in each region. The commodity market boundaries were reached when transfer costs per unit per kilometer multiplied by the distance equals zero when subtracted from the central market price. Results indicated that vegetable farmers had different cropping patterns from those recommended by extension agents using gross margins. This was because they were driven by diverse objectives such as food production; secure market outlets, among others. The Von Thunen model was modified to incorporate production costs in addition to transfer costs and then used to propose the vegetable crops enterprises yielding the highest revenues given the prevailing conditions at the farm.


Keywords: Markets, enterprise choice, intensification, Von Thunen model



[IJARD Vol.3 2002: 8-16]