Meat Industry in Kenya - Research Paper Example

REPORT OF THE MEAT INDUSTRY IN KENYA Introduction The meat industry in Kenya is a rich avenue where one can invest their money. It is categorisedinto different sections that a businessman can choose from. These sections are all well coordinated and they operate as different subdivisions working towards the overall growth of the whole industry. The various sections that an investor can put his capital to include: sale in live livestock, management and operations in the slaughter houses, the tinning/canning industry, meat processing, and the export section to name but a few of the sections available to the investor. The following report gives insight to the industry and the environment surrounding it. PEST analysis of the meat industry in Kenya Political and legal factors affecting meat industry in Kenya Kenya is one of the most politically stable countries in east Africa. This in effect has encouraged the growth of the meat industry in this country. The major meat processing and marketing firm in Kenya - Kenya Meat Commission - was incorporated as a public institution for the sake of engaging professionalism in management and meeting the hefty financial demands the corporation has. This has enabled an excellent running of the corporation and the production of quality meat both for local consumption and for export. The infrastructural improvement in the transport sector in Kenya has enabled speedy delivery of meat to the market while the meat is still fresh. At the same time, cold rooms have been utilized as means of storage for meat. These facilities check on the wastage of the meat due to rotting or otherwise. The quality of meat is ensured through a mandatory inspection of all the meat produced in Kenya. This requirement is carried out by the veterinary department of the Kenya Bureau of Standards- a statutory body mandated for quality check of all Kenyan products. Kenya has a number of laws and acts that regulate the marketing of meat. The "Kenya stock traders licensing Act (1963)", for example, restricts meat or livestock trade to licensed individuals or bodies. Other acts restricting livestock and meat handling include the stock and produce theft act and the dairy industry act among others (Freyssenet 2007pp16-24). Economic factors affecting the meat industry in Kenya The livestock marketing council found in Kenya is a private entity that plays the role of advocating for the rights of livestock traders and assists them in marketing of their products. The banks found in Kenya provide individuals and organizations with agricultural loans to boost their agricultural undertakings including livestock keeping and trading in livestock. The government of Kenya runs the management of the public body that has monopolized the meat processing sector in Kenya. This includes provision of financial support for this corporation. Most of the privately owned firms dealing with livestock and livestock products are privately run. The management of such firms supports them financially and ensure that they are run in the desired way (Ngugi 2001pp52-63). Social and cultural factors affecting the meat industry in Kenya Most of the societies living in Kenya place no restrictions to consumption of meat with the very insignificant exemption of the Indians living in this country. This therefore means that the meat industry sells most of its products to the Kenyan local community. Most of the Kenyan communities value red meat and incorporates its consumption in many of their cultural ceremonies including weddings, initiation and even burial ceremonies. This has a positive impact to the meat industry due to the large public meat consumption during the ceremonies. Kenyan communities are further divided into subcultures which hold a number of social gatherings to deliberate on issues affecting them. Most of these subcultures normally take the red meat as the main diet served during such gatherings. An infamous group that dotes on red meat when holding its social gatherings is the 'Mungiki'. Technological factors affecting meat industry in Kenya The country has a moderately sufficient overall transport system that comes in handy during transportation of meat products to the desired market. The international air transport in well coordinated and efficient. The land transport is moderate and slightly challenged but efficient as well in the major routes for meat transportation. Kenya utilizes an advanced system of storage for the perishable meat. It has a system of cold rooms for storing meat just after leaving the processing line. Trucks used to transport meat have cold or refrigeration facilities to cater for meat on transit. The meat processing sector of the industry is adored with modern facilities for processing meat for export e.g. canning, tinning, and corning beef among other processes. Basing my judgement on the PEST analysis conducted, the economic challenges that an entrant in this industry may have to contend with include acquisition of the capital to start up and run a business dealing with livestock production. This is so because of the limitation of the areas available to obtain this capital since the banks offering the agricultural loans come with terms that discourage farmers and business people to take up the loans. The development of conducive roads in the transport sector to allow efficiency in meat transportation may prove challenging to the new entrant as it is very expensive. It has been left to the government to deal with but the speed at which this development is carried by the government is very discouraging (Hammer and Champy 2003pp17-20). Determinants of demand for meat in Kenya Price The price at which meat is sold determines the demand for it. When the price of meat goes up, fewer individuals will be willing to buy it. They feel like buying the meat at a higher price takes most of the money at their disposal away. Prices of supplements Locals prefer to buy foods that can be supplemented with meat like beans or lentils for the provision of proteins in the body. This idea is mostly influenced by an increase in the price of the meat which makes them reluctant to buy the expensive meat and prefer cheap protein supplements (Dyck 2003pp23-25). Cost of substitutes When meat substitutes cost less than the meat itself, the local demand for meat shifts to the 'more affordable' substitutes. The Kenyan locals for example prefer to take fish or animal organs like the intestines, kidney or liver which costs less than the meat itself (Churchill 2007p12). Income levels of customers The income levels also determine meat consumption within the local Kenyan setting. With most of the households leading a poor life, meat is commonly viewed as a luxury for the rich. Hence the humble house holds consume meat less while the rich ones consume meat very frequently. On the international scale, the supply keeps changing as well e.g. the live animals exported for food were as shown in the table below; Product Year 1999 Year2000 Year 2001 Year 2002 Animals 30 321 20 456 44 045 77 417 Taste of meat Taste of the different meat products determine the products to be sold so that the people who feel that white meat tastes better than red meat will go for the white meat at the expense of the red one (Clarke 2003p10-11). Income distribution The above characterizes the consumption of meat within social, geographical or even cultural levels. Since meat costs much higher than most other sources of income, those people living in areas where income is high will buy more meat than those areas where income is low. Thus the Kenyan suburbs records high meat intake than the slums. Growth strategies available At the onset of entry into the market, various strategies will be available for growth but at different levels of growth. The first growth strategy is growth through differentiating the products. Here, the client will have to be creative enough to offer quality meat or meat products so that the consumers will prefer the client's products better than those of their competitors. This means that the client would have to add some value to their products to make them more appealing to the consumers (Cooke 2006pp52-54). Several ways will be available for the client to use to achieve this. The client will need to conduct a thorough research on the needs of the prospective consumers so that the products they will develop will be a reflection of the needs of the consumer. This will in effect offer an increased chance for preference of the products over other products already in the market. The client will need to increase the variety of products that they will avail to the target market so that the variety will meet different consumer preference while at the same time ensure a large consumer base for the client. The client will need to venture into extensive advertising for their product to create awareness and attract the customers to buy it (Cooke 2006pp55-62). Another growth strategy available for the client is growth through diversification where the client will have to utilize existing technologies together with the existing markets to maintain growth. Use of new markets is preferred as it offers the chance to explore new ventures that might prove positive for the growth. At the same time, the client could use new technology to boost production and utilize an existing market to sell the products to. This will ensure that the business will stabilize and its profit base maintained thus reflects with positive growth. Once the business will stabilize, the client would consider forming mergers with other stabilized business units. The move will distract unhealthy competition and help the merger to maintain a sensible profit base. The merger will grow due to amalgamation of different ideas and ventures into new markets. An example of a merger is the North Africa New Zealand - Dairy merger of Egypt created to foster greater growth in the sale of dairy products (Kotler and Bliemel 2000pp 30-33). Conclusion Putting all the necessary considerations into place, it is can be concluded that the environment surrounding meat and meat production is very conducive for any investor wishing to start up business in the meat industry in Kenya. Being a politically stable country based in a geographical area that suits the production of meat, the industry is very promising and rewarding. The infrastructural support is good enough and the market wide too therefore it is recommendable that an investor looks for the possibility of an opportunity in this industry in Kenya. List of references Churchill, G. 2007 "A paradigm for developing better measures of marketing constructs" Englewood Cliffs pp12-23 Clarke, H. 2003 "Marketing operations" McGraw-Hill Ryerson pp10-17 "Contemporary Kenyan meat industry" Hurtig publishers pp19-27 Dyck, R. 2003 "Introduction to marketing and sales" Nelson Canada pp23-31 Freyssenet, M. 2007 "One best way Meat production in Kenya" Collins pub. Pp16-24 Hammer, M., Champy J. 2003 "Reengineering the corporation: A manifesto for business revolution" Collinspp17-37 Kotler, P. & Bliemel, F. 2000 "Marketing management" Englewood Cliffs pp30-33 Morgan, R 2001 "The commitment-trust theory of relationship marketing" pp61-67 Ngugi, T. 2001 "Kenya Meat Commission: A revived corporation" University of Nairobi press. pp23-38 P Cooke 2006 "Flexible integration, scope economies, and strategic alliances: social and spatial mediations" Blackwell Pub pp52-63 Read More