This document summarizes a study on determining consumers' willingness to pay for value-added pearl millet products in Kenya. The study found that on average, consumers were willing to pay a 42% price premium for pearl millet products compared to the base price. Through a logit model, several factors were found to influence willingness to pay, including higher income, larger family size, higher education levels, and greater product awareness. The study recommends that fast food marketers target different consumer classes based on willingness to pay in order to maximize profits from value-added pearl millet products.

1. DETERMINANTS OF CONSUMER’S CHOICE
AND POTENTIAL WILLINGNESS TO PAY
HIGHER PRICES: A PEARL MILLET CASE
STUDY IN KENYA
OKECH, S.O., NGIGI, M. AND KIMURTO, P.K.

2. MBEERE DISTRICT

3. INTRODUCTION
• Millets 4th important cereal in cultivation and
production in the tropics
•Coverage 15 and 12 m ha (Africa and Asia)
• Pearl Millet (Major): Merits;
•Hot and dry conditions (200-600 mm p.a);
•Requires 25% less rainfall
•Diet >500 m households;
•Feed source
•Fuel and ethanol production

4. INTRODUCTION CONT’D
•Marketing challenges;
•Poorly developed and fragmented markets with weak value chains,
•High assembly and processing costs,
•Uncompetitive grain prices,
•Lack of market information
• Limited processing facilities,
•Lags in legal and policy framework
KENYA
• Yield/Ha decline1,610 kg in (1980) to 200-800 kg (2008) - potential of
1,500-3,000 kg ha-1

5. INTRODUCTION CONT’D
•Promotional efforts:
•Non-traditional crops project - acceptability and consumption (GoK)
•EPHTFC project-income and food security (IFAD & GoK)
•HOPE project- productivity and marketing challenges (ICRISAT)
•INTSORMIL/B&M Gates - millets and sorghum production and
marketing ESA
•ASARECA pearl millet productivity project
•However,
•<3% pearl millet enters formal production channels
•2 m tons pearl millet is fed to animals compared to 30 m tons
of sorghum

6. GENERAL OBJECTIVE
•To contribute towards the competitiveness and
enhancement of market access of pearl millet for the
benefit of the farming communities in Arid and Semi-
Arid Lands of Kenya
Specific objective:
• To determine consumers’ willingness to pay for
value added pearl millet products within markets -
CVM

7. STUDY AREA: MBEERE DISTRICT
•A total area of 2,097KM2 ;Latitude 00 N and
00 N; Longitude 370 E and 370 E; Altitude -
500-1200m above sea level
•Unreliable rainfall (640 – 1,110mm) with most
parts receiving less than 750mm annually
•Average temperature; 20-300C and
sometimes -above 300C (March- hottest
month)

8. Dependent variable Definition Expected sign
WTP (Willingness to Pay) If respondent is WTP a price premium for
pearl millet products
1-Yes; 0- Otherwise
Independent variables
Income (Income) What is monthly income level of a
household head (Categorical)
+
Children (Nochildren) The number of children below 12 years in
a household
+
Education (EducLevel) Highest educational level of the
respondent (Categorical)
-
Gender (Gender) Gender of the decision maker (Dummy) +/-
Employment (Employmentstatus) Is the household head employed
(categorical)
+
Age (AgeofHH) Age of the decision maker (years) -
Household head (HHhead) If the buyer is the head of a household
(Dummy)
+
Awareness (Awareness) The household head level of
awareness of pearl millet value added
product (Categorical)
+/_
Heard (HeardProduct) If a Household have heard of a pearl
millet value added product
+
DATA ANALYSIS: NATURE AND A PRIORI EXPECTED
SIGNS OF LOGIT MODEL

9. RESULT AND DISCUSSION
Variables Consumers
Mean age (years) 45.42 (11.74)
Educational level (%) Illiterate 5
Primary 52
Secondary 31
Tertiary 9
University 3
Gender (%) Male 61
Female 39
Respondents Employment status
(%) Full time 18
Part time 21
Unemployed 55

10. ESTIMATES OF MEAN WTP MODEL
Variable Coefficient estimate Standard
error
P- value
Constant (α) 9.235 1.662 0.000
Bid (ρ) 0.065 0.013 0.000
Mean WTP (α/ρ) 142.077
Number of observations = 100; Log likelihood = -63.862;
(Bhatta et al., 2010 40-60% tomatoes; Loureiro and Umberger, 2003 (38-58% certified
steak and Hamburger)
• On average wtp Kshs.142 represented a premium price of 42%
over the base price of Kshs 100 of finger millet product.

11. ESTIMATED LOGIT MODEL RESULT
WTP Coeff Std error Z P>|z| Marginal
Effects
HHhead -0.555 0.716 -0.78 0.438 -0.056
AgeofHH 0.080 0.029 2.76 0.006* 0.008
Gender 1.252 0.728 1.72 0.086*** 0.127
EducLevel -0.102 0.348 -0.29 0.769 -0.010
NoChildren 0.558 0.244 2.29 0.022** 0.057
Employment 0.238 0.277 0.86 0.390 0.024
Income 1.029 0.388 2.65 0.008* 0.105
Awareness 1.351 0.420 3.22 0.001* 0.138
HeardProduct 0.229 0.455 0.50 0.615 0.023

12. CONCLUSION
•Consumer WTP >42% price premium (income and HH
composition and prior knowledge)

13. POLICY RECOMMENDATION
•Fast food marketers should be made aware of price
premium to enable them adjust their marketing strategies
(consumer classes)

14. THANK YOU
END