E. Afri. Agri. For.
J (2022,Volume 88 (2), Pg 109-114)
ANALYSIS OF SORGHUM MARKET STRUCTURE, CONDUCT AND
PERFORMANCE IN ISIOLO COUNTY, KENYA
G.G. Kalawa#, G.W. Mwenjeri and L.W. Ngare
#
Kenyatta University, Department of Agricultural Economics, School of Agriculture and
Enterprise development, P.O Box 43844-00100, Nairobi, Kenya
ABSTRACT
The sorghum market in Kenya has experienced
remarkable growth in the last few years and continues to
grow as the crop gains significant attention from various
interest groups. However, the lack of a well-coordinated
and competitive marketing system for raw sorghum and
its value-added products remains a major constraint in
further development of its market. Therefore, the main
focus of this study was to assess the competitiveness of
the sorghum market in Isiolo County, Kenya, using the
Structure, Conduct, and Performance model, to ascertain
the performance of the marketing system before any
interventions are made to change the existing conditions.
Data were obtained from both primary and secondary
sources. A structured questionnaire was used to acquire
information from respondents. This study employed
descriptive statistics, where the Gini coefficient and
the Lorenz curve were used to determine the degree
of market concentration in the study area. The gross
margin, marketing margin and marketing efficiency were
used to measure the performance of sorghum market in
Isiolo County, Kenya. The results of the study showed
that the Gini coefficient was 0.612 for wholesalers
and retailers indicating a highly concentrated market
hence inequality in income distribution. The producers
attained the highest gross margin of KES11/kg, followed
by wholesalers and retailers at KES 7 and KES 5/kg,
respectively. In conclusion, sorghum production and
trading in Isiolo is profitable but uncompetitive. It is
therefore recommended that the Government of Kenya
should develop a policy that strengthens sorghum
production and marketing to make it more competitive
and ensure all the actors are well protected from the
hefty costs that reduce their efficiency hence low-profit
margins. Secondly, access to information should be
accelerated through investment in telecommunication
#
Corresponding author: kalawagitonga@gmail.com
109
platforms such as the use of cell phones to ensure timely
dissemination of market information to the farmers.
Finally, affordable and easily accessible credit should be
availed to both producers and traders.
Keywords: Market concentration, Gini coefficient,
gross margin, marketing efficiency
INTRODUCTION
Agriculture is a major source of income among households
in developing countries. In Kenya, the agricultural sector
is the second-largest contributor to the country’s GDP at
23% (KNBS, 2021) and with a multiplier effect of 1.64 to
the non-agricultural sector. Sorghum is among the crops
contributing revenue in Isiolo County with a record
of about 270 bags in 2019 (Muthami, 2021). Different
sorghum varieties are available for different soils with
Gadam being the most cultivated variety in Isiolo County.
With the increased demand in the manufacturing
industry for different uses in making products such as
snacks and various brews, sorghum marketing should
be streamlined to enhance proper commercialization.
Agricultural commercialization involves the transition
from subsistence to increasingly market-oriented
production and the use of high-quality input; a process that
is mainly driven by globalization, urbanization, migration,
and rising per capita income (Omiti et.al., 2009). The
domestic market for sorghum is limited since it is mainly
used as a starch and some consumers opt to purchase
maize instead. The main buyers (89.6%) of sorghum
are local buyers (Beinah et al., 2020). The African
countries are the main importers of Kenyan sorghum.
This translates to inadequate incomes for the farmers as
well as sorghum wholesalers and retailers (Otekunrin et
al. (2019). This study was aimed at assessing the current
 Analysis of Sorghum Market Structure, Conduct and Performance in Isiolo County, Kenya
state of sorghum market in Isiolo County to identify areas
that need attention and recommend viable ways on how
to streamline it to enhance competitiveness hence improve
the economy.
MATERIALS AND METHODS
Study Area
Isiolo County covers approximately 25,700 km2 and has a
population of 268,002 (KNBS, 2019). The annual rainfall
ranges between 200 and 650 mm (Okullo et. al., 2017). It
lies between agro-ecological zones LM4 to LM6. There are
about 12,000 farmers in Isiolo County, majority of them
practicing rain-fed agriculture, with 10% doing irrigated
agriculture (Mohamed et al., 2020). Sorghum is among
the most dominant crops grown here for both subsistence
and commercial purposes.
Research design
The research design used was the descriptive approach.
Random sampling was employed while dealing with
sorghum farmers while clustered sampling was employed
for sorghum traders. The whole cluster of traders was
used in this study. A structured questionnaire was used to
capture information from the respondents.
Target population
The study targeted small-scale sorghum farming
households, and sorghum traders (retailers and
wholesalers).
Sample size determination for farmers
The formula by Yamane (1967) was used to determine
the sample size for the study as in Equation 1 below:
…………………Equation 1
Where;
n= the desired sample size
N= the study population (total number of
sorghum-growing households)
e= sampling error
A 95 % confidence interval with a 0.05 error acceptability
margin was used (Mugenda and Mugenda 2003).
n=415 / [1+415x 0.052] = 203.7109
A sample size of 203 sorghum farmers was thus used.
To achieve a high level of accuracy, the entire trader’s
109
population (census) of retailers and wholesalers was used
in the study since their population was small from the
county (KNBS, 2019).
Type and the source of data
Smallholder farmers across Isiolo County and retailers,
as well as wholesalers, formed primary data sources.
Secondary data sources included a list of various relevant
published and unpublished reports and Kenya Climate-
Smart Agriculture Strategy bulletins (KCSAP) and
County government reports and records. A structured
questionnaire was used to collect data.
Structure, Conduct, and performance of the market
Market structure characterization is based on the traits
that affect how businesses operating in a certain market
behave and perform (Shubik and Levitan. 2013). The
market structure can be perfect competition, monopolistic
competition, oligopoly, and monopoly. The type or nature
of the market structure is influenced by the number
of buyers and sellers, the negotiation abilities of both
buyers and sellers, the concentration of the market,
the diversification of products, and finally the level of
difficulty in entering or leaving the market.
Market concentration
This measures the extent to which sales in an agricultural
market are dominated by one or more traders (Fafchamp
and Gabre-Madhin, 2006). The concentration ratio,
the Gini coefficient, and the Lorenz curve were used to
measure the degree of market concentration in this study.
The Gini coefficient was calculated following Tiku and
Sinonya, 2012)
Where G is the value of the Gini coefficient, X is the
proportion of sellers and Y is the cumulative proportion
of sales.
Market conduct
This refers to the price and other market policies which
are pursued by market players and the way in which
they coordinate their decisions (Haruna et al., 2012).
Conditions that are thought to indicate the exploitative
 KALAWA, MWENJERI AND NGARE
relationship between producers and purchasers were
surveyed in this study.
Market performance
This is the outcome of the relationship between selling
price to costs, the size of output, and the efficiency of
production (Nurhilalia et al., 2019). It can be measured
by analysing the marketing margin, market efficiency, and
producer share.
The total marketing margin is given by the following
formula;
Total Gross Marketing Margin;
The producer’s gross marketing margin was calculated as
GMMp =
Figure 1: Lorenz curve for traders in Isiolo County
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Marketing Efficiency
The marketing efficiency index was used to assess
marketing efficiency. It is the net price ratio obtained by
farmers to total marketing costs plus total margin.
MEI: Marketing efficiency index;
NP: Net Price received by the farmers;
NM: Total net marketing margin (for the rest of the
chain’s players)
MC: Total marketing cost
RESULTS
Market structure
Traders’ market concentration
Figure 1 presents the market concertation results for
traders in Isiolo County.
The average quantity of sorghum traded was 114.92kg per
person per season with a total of 9,538 kg. A majority of
traders sold between 3,000 and 6000 kg of sorghum in one
season. The average sorghum sales in a season by traders
amounted to KES 620,961 and a Gini coefficient of 0.612
as shown in Table I below.
 Analysis of Sorghum Market Structure, Conduct and Performance in Isiolo County, Kenya

TABLE I - GINI COEFFICIENT FOR SORGHUM TRADERS IN ISIOLO COUNTY

No of The proportion Proportion Total
Quantity sold (Kg) Cumulative % Sales (KES) Cumulative (Y) XY
traders of Traders (X) Yearly Sales
0-3000 17 0.205 0.205 23500 0.038 0.038 0.008
3000-6000 32 0.386 0.591 161956 0.261 0.299 0.115
6000-9000 23 0.277 0.868 167535 0.270 0.569 0.158
9000-12000 2 0.024 0.892 20730 0.033 0.602 0.015
12000-15000 2 0.024 0.916 28500 0.046 0.648 0.016
15000-18000 0 0.000 0.916 0 0.000 0.648 0.000
18000-21000 2 0.024 0.940 39000 0.063 0.711 0.017
Above 21000 5 0.060 1.000 179740 0.289 1.000 0.060
Total 83 1.000 620961 0.388
Gini coefficient 0.612

Market performance Gross Margin Retailers gross margin

The gross margin from the sale of sorghum for the
wholesalers was KES 9.7/kg while the total gross
margin was 29,424.40. The total revenue was 193,695
while the total cost stood at 164,270 accounting for the
aforementioned gross margin per kilogram and the total
gross margin. (TableII)
Table III summarizes the Gross Margins for the retailers.
The total revenue for retailers stood at 406,652, the total
variable cost stood at 372,480 thus making the gross
margin to stand at 34,172 which translates to 5.24113 per
kg of sorghum.

TABLE II – AVERAGE GROSS MARGINS FOR SORGHUM WHOLESALERS IN ISIOLO COUNTY

Whole sales Gross Margins
Item Quantity (Kg) Price (KES) Total
Revenue 3,018 64.18 193,695.20
Variable cost
Buying cost 3,018 45.38 136,956.80
Transport 9,950.00
Loading and offloading cost 3,450.00
Marketing loss 5,594.00
Marketing cost 8,320.00
Total Variable Costs 164,270.80
Gross margin 29,424.40
Gross margin/kg 9.75

TABLE III - GROSS MARGINS FOR SORGHUM RETAILERS IN ISIOLO COUNTY

Retailers’ Gross Margin
Item Quantity (kg) Price(KES) Total
Revenue 6,520 62.37 406,652.40
Variable cost
Buying cost 6,520 45.07 293,856.40
Transport 25,600.00
Loading and off-loading cost 9,500.00
Market losses (Waste) 12,683.83
Marketing cost (transaction cost) 30,840.00
Total variable costs 372,480.20
Gross margin 34,172.17
Gross margin/kg 5.24

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 KALAWA, MWENJERI AND NGARE
Producer gross margin
The revenue realized by the producers was 479,611,
against 358,142 in variable costs thereby realizing
121,468 in gross profit margin which translates to 11 per
kg.( Table IV)
TABLE IV - SORGHUM PRODUCER’S GROSS MARGIN IN ISIOLO COUNTY
Producer Gross Margin
Item Quantity(kg) Price(KES)
Revenue 10,634.4 45.10
Output
Variable cost
Labour cost for land preparation
Labour costs for weeding
Seed cost
Production Losses (Spoilage)
Harvesting costs
Total Variable Costs
Gross Margin
Gross Margin/kg
DISCUSSION
Traders’ market concentration
The trader’s Gini coefficient was 0.612 implying that
the market for traders was highly concentrated and thus
not competitive. Several researchers have used the Gini
coefficient and Lorenz curve to address market structures
of different agricultural products and found similar
results. In South Sudan for instance, Ngigi (2008) found
a Gini coefficient of 0.7 for the grain market indicating a
highly concentrated market. In Pwalungu Ghana, the Gini
coefficient was used by Haruna et al. (2012) to identify the
market concentration of the tomato market and found that
it was highly concentrated at 0.64 and 0.58 for retailers
and wholesalers, respectively.
A Gini coefficient of 0.54 and 0.54 for processors and
merchants, respectively, was found by Tiku and Sinonga
(2012) during a study on palm oil marketers in Cross
river state, Nigeria an implication that the market was
oligopolistic in structure. Zorinah (2016) during a study
on the market performance of cabbage in the central
district of Botswana also found a Gini coefficient of
0.672 and 0.509 for traders and wholesalers, respectively,
an indication that the market was not very competitive.
112
However, some studies have had different and contrasting
outcomes. Ugwumba (2011) during a study of live-
catfish market structure in Anambra State, Nigeria found
a Gini coefficient of 0.19 and 0.26 amongst retailers and
producers, respectively, indicating a competitive market.
Total
479,611.40
202,540.00
50,640.00
31,650.00
22,672.80
50,640.00
358,142.80
121,468.60
11.40
Gross Margin
Reporting and understanding the gross margins is very
important as it calculates the profits of the core business
under operation using the variable costs while excluding
the fixed costs. The gross margin for wholesalers
was higher compared to that of retailers owing to the
differences in quantities sold. The gross margins for both
retailers and wholesalers were positive thus indicating
positive indices in gross profits in sorghum business.
The differences could be attributed to the distances to the
market, seasonality and the quantities sold by the different
stakeholders. The gross profit margin was greatest among
the producers bearing in mind that fixed costs were not
included in the calculation.
Total Gross marketing margin
The marketing margin is the difference between prices at
two different points in a marketing channel (Smith, 1992).
The final consumer price from the producer was KES 62,
while the producer price is KES 45.10. The marketing
margin for the whole process from the producers to the
final consumers was 27%. This means that the average
cost of acquiring a customer is 27% more than the buying
price from the producer. The marketing cost is passed
down to the consumer and thus the consumers buy at a
 Analysis of Sorghum Market Structure, Conduct and Performance in Isiolo County, Kenya

higher cost. Secondly, access to information should be accelerated

through investment in telecommunication platforms to
Marketing efficiency ensure timely market information such as price, and
This refers to the degree to which the current market varieties best suitable are disseminated to the farmers
prices reflect all available, relevant information about the through use of cell phones.
actual value of the product traded that offers maximum
possible opportunities for traders to buy and sell without Affordable credit should be availed to sorghum traders
incurring additional transactional cost (Rösch et. al., through the various government agencies such as the
2017). It estimates the financial marketing feasibility Agricultural Finance Corporation and the terms of lending
of executing any additional services. A positive signed should be flexible and accommodative. The government
estimate would justify application of such services and a grant for the vulnerable groups should also be effected to
negative estimate will indicate otherwise (Abdou, 2007). cushion the youths and women in sorghum trading.
From this study the value was positive which justifies the
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