Structure and performance of fish Markets in the Lake Victoria region, Kenya

Abstract

This study investigates the structure and performance of fish markets in Kenya's Lake Victoria region. The primary data used to analyse the market structure is based on a multistage survey of 465 respondents in Busia, Siaya, Kisumu and Homabay districts, but market performance is evaluated using time-series data from government documents. The time series data capture changes in fish prices, supply and profitability over a period of 25 years before (1975 - 80) and after (1981 - 99) the Lake Victoria fisheries transformation. The results show that the retail trade in all districts and fishing in Kisumu and Homabay, are highly competitive. However, the wholesale fish markets in Busia, Siaya and Homabay exhibit oligopolistic tendencies. The study finds that traders' distributive margins were in excess of marketing costs, particularly, in Siaya and Busia districts where wholesale gross profits were substantially above average costs. Further, regression results show a positive supply slope indicating that fishermen respond to price incentives. The structural transformation of the lake region has affected the Nile perch fishery most, in terms of catch expansion and profitability. The findings have distinct policy relevance in several respects. First, they point to the need to remove distortions that characterize wholesale fish markets. Second, there is need for de-concentration and competition policies to reduce market power of the dominant fishermen and wholesalers. In facilitating entry, caution should be exercised to avoid over-capitalization and depletion offish stocks. Given the sizeable price elasticities of supply of fish species, price can be an important ingredient of the Lake Victoria fisheries management and conservation policy. The dilemma of the fisheries policy managers, however, is whether to allow prices to fluctuate to signal incentives to both the fishermen and consumers, or to control the fish prices faced by the poor. The unprecedented growth of the lucrative Nile perch export business threatens livelihoods and food security of the lake communities who have been forced to pave way for exports. Foreign investors have the capacity to exploit the fishery as heavily and as quickly as possible, unconstrained by concerns of sustainability. There is thus, urgent need for a policy to control the amount of fish exports and to ensure local food security and sustainability of the fishery.