The growing population in developing countries has necessitated a shift in preference for indigenous food. Small ruminant meat being one of the preferred indigenous products has registered huge increase in demand over the last few years. Therefore, demand for sheep and goat meat is predicted to rise predominantly in Arid and Semi- Arid Lands (ASAL), thereby creating new meat markets as well as expansion of the existing small ruminant value chain. Isiolo- Nairobi small ruminant value chain is characterized by heavy traffic of small ruminant livestock destined for Nairobi meat markets and its environs. It is therefore expected that, this high volume of livestock trade would empower the livestock keepers and ultimately improve their livelihoods. However, in spite of this economic potential, the livestock keepers still live as low income earners thereby leading to prevalent poverty conditions. In this regard therefore, the study singled out to characterize Small ruminant stock market participants along the Isiolo- Nairobi value chain and examine the nature of the market structure exhibited in the Small ruminant stock trade. Sample size of 210 consisted of Nairobi traders, brokers, butchers and keepers from Isiolo were interviewed. The analytical approach used in the analysis was combined Lerner index and Gini-coefficient model. Results show that 68% of the market participants along the value chain are mainly the brokers with marketing participants highly varied. Lerner index indicated that the 64% of the market gain lies in the hands of the traders along the chain rather than to the farmers. Only 36% gain along the chain go to pastoralists. Among other initiatives that seek to empower livestock keepers by providing adequate support on market infrastructure, the study recommends that livestock keepers (pastoralists) should be facilitated to form vibrant groups (farmer groups) in ASALs to strengthen their participation in the Livestock market. This is because, strong and vibrant farmers’ organizations can provide opportunities to farmers to effectively play a role in the livestock market economy and largely benefit from it by improving household income.

Background information 
Sub-Saharan Africa emerges as one of the regions in the world with the fastest growing population, approximated at 800 million in the year 2007 (Collins, 2007) and growth rate estimated at 2.3 percent per annum. Despite the fact that the larger part of Sub Saharan Africa is Arid and Semi Arid Land (ASAL), rain-fed agriculture has always been the integral pillar of the economic activity in the region with production ranging from short term drought tolerant crop varieties to livestock production (World Bank, 2009). It is however noted that, livestock production especially sheep and goat forms the major economic activity in the east and central Sub Saharan Africa (SSA) region. As reported in the Agricultural Sector Development Strategy Plan 2010-2020, Kenya has its economy purely based on agricultural production which directly contributes 26% of the GDP annually and another 25% indirectly (GoK, 2008). The sector accounts for 65% of the Kenya’s total exports and grant more than 70% of informal employment in the rural areas (Government of Kenya, 2010). Horticulture has recorded an outstanding export-driven expansion in the precedent 5 years and is currently the principal subsector, contributing 33% of the GDP and 38% of export earnings. According to Blackburn (2007), findings reveal that about 84% and 59% households in Ethiopia and Kenya are pastoralists, respectively. Of all these pastoralists, 73% of them keep goats. 

On the other hand, Food crops contribute 32% of the GDP with only 0.5% per cent accounting for exports. The livestock subsector contributes 17% of the GDP and 7% of exports. The Agricultural Sector Development Strategy Plan 2010-2020 indicates that livestock and fisheries subsectors have huge potential for growth that has not been exploited and these statistics are just indicative measure of such a potential (Figure 1). The strength of agriculture sector performance has a positive correlation with the overall economy, signifying the outstanding contribution of this sector to the livelihoods of the rural population. As indicated in Figure (1), between 1980 and 1990 the sector recorded an average annual growth rate of 3.5 per cent that abridged to 1.3 per cent in the 1990s through 2005 before the economy boosted its performance in 2005. On this basis, agricultural sector is expected to remain on an upward trend with main focus shifting of sustainability.

One of the major challenge that agricultural sector faces is the dependency on rain fed agriculture (ADSP, 2010). Worsened by the growing threat of climate change, Arid and Semi- Arid Land (ASAL) has enlarged to cover more than 84 per cent of the Kenyan land mass2, given that ASAL is estimated to support over 30 percent of the human population and 60 percent of the total livestock population (Verbeek et al., 2007). The livelihoods of the population in ASAL mainly depend on livestock production; specifically, sheep and goat which form part of the small ruminant livestock in Kenya (Kosgey et al., 2006). The small ruminants (Sheep and Goat) are adapted to cope with harsh climatic conditions due to their ability to utilize a wide variety of food sources. For instance, Sheep can exploit a wide range of food sources such as cacti in the desert, tree leaves and fruit seeds. Perhaps the most extraordinary adaptation is that of feeding on dry thorny bushes. The ability to adapt to these harsh conditions explains why Sheep and goats constitute 60% of livestock in these areas (Barrett et al., 2006). This means that, ASAL economy is driven by the performance of the small ruminant livestock market. 

The observed performance of the small ruminant livestock market over time indicates that in the future, there would be increased demand for livestock meat and its products. This is what Delgado (2001) connote as “livestock revolution.” Based on this concept, it is envisaged that persistent change in meat demand within the global market is expected to increase. This increase over time implies that many rural households in SSA will benefit from increased demand for small ruminant products, hence a positive effect in household income. This concept further stipulated that from 1970s to mid of 1990s, the consumption of meat and milk in the developing countries has increased tremendously more than twice the rate of increase in developed economies. As observed within these years, there is a justification for this demand to remain on an upward trend. In summary, livestock revolution is anchored on the level of demand of livestock products such as meat, hide and skin among other products. However, based on marketing theory, the key assumption of this projection is purely based on the free forces of demand and supply (influenced by increase in population, increase in income levels for the consumers and suppliers, increase in urbanization rate) to create market opportunities for livestock keepers in ASAL (Bellemare et al., 2004). 

In order for the ASAL market to benefit from this market, there must be an efficient market and marketing system. Efficient functioning of the livestock and livestock product market is the only sole economic incentive to justify the livestock keepers’ engagement in livestock trade. However, in the recent past, livestock keepers have experienced both market and climate related challenges. For example, a lot of livestock transactions are affected during the dry seasons since the livestock keepers are “desperate” to dispose their sheep and goats before succumbing to drought. Accumulative effect of this scenario has led to low prices of livestock and their products especially during the dry seasons (Barrett et al., 2001). Since livestock keepers’ measure wealth in terms of the number of livestock owned, the income generated from sale of small ruminant stock wields considerable impacts in livelihoods income. This is viewed in terms of how much they offload to the market, retain for consumption as well as cumulative effect of livestock income within the households. 

According to Barrett et al. (2001), livestock markets in ASALs are considerably locked up due to existing marketing inefficiencies: high transaction costs and poor market infrastructure, which further hinder market accessibility. Efficient market and marketing systems is therefore very key to the study since livestock industry has a towering degree of vertical relations with upstream and down-stream industries (ADSP, 2010). Marketing challenges experienced by the livestock keepers and traders in marketing the livestock and livestock products can be viewed to depict less attention on this sector; given its massive contribution in employing over 10 million people, contributing 7 per cent to the GDP and 17 per cent to the GDP and provides 50 per cent of the agricultural labor. Significantly, small ruminant livestock plays a big role in pastoral households’ food security and incomes due to their short-generation intervals, high flexibility and all-around feeding habits. Kenya has an estimated 13 million goats and 10 million sheep with approximated Annual meat production 84,000 tonnes of mutton and chevon worth KES 14 billion (Government of Kenya, 2010). Figure (2) below is a comparative livestock prices 2002 to 2008 in the Isiolo region. Livestock prices have fairly remained within a narrow range of KE 2,000 to KE 2,500 despite the fact that this region experiences increased traffic of traders destined for various terminal markets. The dismal improvement in prices over the years (figure 

2) raises a big question on the ASAL markets ability to respond to the changing economic environment (Njanja et al., 2003). As expected, livestock keepers are suppose to benefit from increased demand over time. Conversely, this market may be seen to operate in “vacuum” that does not allow relay of information that reshapes market prices. The existence of information asymmetry could characterize the market behavior reflected in this case.

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