Effect of Value Addition on Price: A Hedonic Analysis of Peanut in Retail Supermarkets in Nairobi, Kenya
Market liberalization, globalization, and changing consumer behaviour are causing transformation in Kenyan agro-food value chains. Production, marketing and consumption are moving towards high-valued products resulting to diversification in the agricultural food production portfolio. The purpose of this research was to evaluate the effects of value addition on product price in reducing the declining per capita expenditure as well as reduced competitiveness of peanut and its products sold in the supermarkets of Nairobi. The objectives were, to characterize peanut value addition levels, establish whether the level of value addition affects prices, and determine if there are price differentials due to supermarket location, division as well as across the types of the supermarkets in addition to establishing factors that influence price differentials in Nairobi. The eight administrative divisions of Nairobi were stratified to give a sample of 100, who were randomly selected. Descriptive statistics were used to analyze and describe the nature of the supermarkets, while one way ANOVA, least square difference (LSD), Tukey post hoc tests and hedonic model were used in the analysis. Results show that there were eight different levels of value addition for peanuts, and prices differed significantly across the levels of value addition. product packaging, brand and product weight significantly influenced peanut product prices. Therefore, the study suggests policy interventions’ to stimulate production of value added products, establishment of a national market education program in addition to strengthening agricultural research extension services.
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