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D. Malaa1* ; G. A. Muluh2 ; F. Kamajou2

Institute of Agricultural Research for Development (IRAD), Dschang
BP 44 Dschang, West Province, Cameroon
Tel 237 777 00 69
Faculty of Economics and Management University of Dschang Cameroon

This study assessed the efficiency of three honey marketing organisations, which emerged at the

advent of market liberalisation, in the Bamenda Central, Belo and Elak- Oku Sub-Divisions in

the North West Province of Cameroon. This research addresses the question: are honey

marketing organisations efficient in their pricing. Two types of honey (white honey and brown

fluid honey) are marketed, and the marketing organisations are judged organised and efficient

given the marketing functions have been liberalised with little or no state intervention in the

honey sub-sector. Honey marketing organisations are profitable with the return of profit margins

to total cost equal to or greater than the minimum interest rate of 18%. Whilst it is recommended

that actors or stakeholders in this sector should organise workshops/training sessions in

processing and marketing to empower themselves, further studies should be focused on the cost

of processing techniques.

Key Words: Honey, Marketing organisations, Pricing strategy, Profitability, Profit margins.

The relationship between man and bees dates back to thousands of years. What began as small-

scale honey hunting from wild nests before the mid 1980s has developed into an apiary industry

from which apiarists produce, process and market honey as a principal product and other by-

products (wax, royal jelly, propolis etc). The capacity of man and any economic activity to

evolve in response to changes in culture and society, resource endowments, and technology is an

important determinant of economic growth (Ruttan and Hayami, 1984). In the realm of economic

growth, markets in general can provide incentives to individuals, households and other economic

agents through price signals to develop new technologies, products, and sources of supply, new

markets and new methods of exploiting them. According to Crawford (1997), Harris (1981),

Scarborough and Kydds (1992), and Smith (1981), price signals should cover cost structure and

ensure a profit margin to enable entrepreneurs to stay in business. This profit margin should be

equal to or greater than the minimum interest rate of credit accessible to the traders (Harris 1981;

Scarborough and Kydd, 1992). The development and expansion of markets can provide a source

of productive employment, and income generation, especially in developing economies in

transition. However, governments usually have an important role in regulating the market

mechanism to ensure efficiency, equity and macroeconomic stability. In developing economies,

governments have thus intervened in marketing functions, especially in the sales of smallholder

cash crops and other important foodstuffs. A case in point has been the state controlled

marketing boards in sub-Saharan Africa that had the role to contribute to orderly and efficient

marketing, thus ensuring the highest value added in production and maximum consumer

satisfaction (Crawford 1997). Notwithstanding, by the late 1990s, marketing boards, especially

in the case of Cameroon fell short of their expectations. The failure of these organs was due to
poor price structure, low levels of profitability and inadequate management practices (Crawford,

1997; Scarborough and Kydd, 1992), This coupled with the drop in prices of export commodities

in the mid 1980s led to the collapse of the marketing boards and nation wide spread poverty that

led to economic crisis. In an effort to combat the crisis, a structural adjustment loan was granted

to Cameroon on the condition that the economy be liberalised (World bank, 1994).

The main objectives of liberalisation were: to increase economic efficiency of marketing and

price structures; and to give incentives to profit maximising entrepreneurs to develop new

products, new methods of product exploitation, sources of supply and to organise the markets in

a way to improve living standard (Spooner & Smith, 1991).

With the pre-occupation of improving livelihood systems, individuals, households as well as

organisations found treasure in the exploitation of non-timber forest products (NTFP). The most

exploited NTFP in the forest zone include different species of wild animals, wild vegetable and

spices (Ndoye, 1995), whereas fruits, mushroom, honey, fuel wood and prunus prevailed in the

western highlands (Vabi and Malaa, 2003). Unlike other NTFP, honey is exploited and marketed

in large scale by the inhabitants of the Montane forest of the North West Province (Paterson,

1989). Beside the income generating aspect of honey, its production contributes a great deal to,

human development by providing food, health and employment (Forboseh, 2002). Its production

occupies little space and equally contributes to bio-diversity conservation.

To ensure private entrepreneurs engagement in new markets the government of Cameroon

promulgated laws that permitted the creation of associations, co-operatives, common initiative

groups and non-governmental organisations. Their principal function was to educate members

toward market-oriented production. Among them was the honey marketing organisations of the

North West Province. Marketing organisations according to Arnold, (1995) and Kamajou, (1997)
play an important buffer role by providing incomes that sustain the rural population in times of

hardship. Despite the uncertainty about the outcome of the policy measures to enhance economic

efficiency (World Bank and UNDP, 1989), these honey-marketing organisations are apparently

thriving in business (Paterson, 1989). Dongock et al (2004), attribute this to the present of 78

species of milliferous plants with flowering period that spread throughout the year in the

Province. The potentials of the honey marketing organisations is reflected in the increase of

honey production from 112 tonnes in 1988 (Paterson, 1989) to 248 tonnes in 2001 (Forboseh,

2002) and a mean annual contribution of honey to the Provincial revenue of eighty-two million

francs FCFA (Forboseh, 2000). Honey production is an economically rewarding and

employment-creating activity that is less expensive in terms of input and capital requirements

(FAO, 1986). This notwithstanding, appropriate and efficient marketing is the stimulant of large-

scale production (Pableo and Ignacio, 1987). Despite this important role played by the honey

marketing organisations little is known about their marketing efficiency. Thus, this study seeks

to investigate the efficiency of the price structure and profit margins of the honey marketing




The North West is one of the Provinces of Cameroon, it is situated between latitude 5° and 7°N,

and longitude 9° and 11° E. The Province is a huge plateau with an altitude ranging from 300m

in the Mbaw Plain (Abongshie) in Ako Sub Division to about 3000m (Mount Kilum) above sea

level in Elak-Oku Sub Division (Martin et al 2000; MINEF and UNDP (1994). The Province has

five agro-ecological zones, which include the Savannah Woodland; lowland forest; flood plains;
Montane forest; and afro-alphine vegetation. The area of study covers the Montane forest area of

the Province.

The Montane forest is characterised by mountainous areas and lies between altitudes 2000 and

3000 meters above sea level. The vegetation consists generally of degraded forest, some

economic timber species in forest gallery and a relatively small quantity of grass. Various animal

and bird species exist in the forest. This Montane forest is found in the Boyo, Ndonga and

Mantung, Mezam and Bui Divisions (Figure 2), (Martin et al 2000; MINEF and UNDP (1994).

More than 90% of the population are small-scale resource-limited farmers living in the rural

area. Scattered all over the province are small and medium scale enterprises whose raw materials

are NTFP (MINEF & UNDP, 1994). They are also involved in petty trading. Honey production

is the principal forest activity of the inhabitants of the Montane forest area. The honey is being

sold by marketing organisation such as the apicultural and Nature Conservation Organisation

(ANCO), a non-governmental organisation in the Bamenda Central Sub-division with trademark

Cameroon Highlands Honey. Belo Rural Development Project (BERUDEP), a common

initiative group in the Belo Sub-division with trademark BERUDEP Honey; Oku Honey Co-

operative Society (OHCS), a co-operative in the Elak-Oku Sub-division with trademark Oku

Honey is found at the foot of the Kilum Mountain Range.

2.2. Data Requirements and Sampling

Primary based on the form and type of honey sold, their price determination strategies and

marketing constraints were obtained from market officials. Secondary data with regard to history

of the honey marketing organisations their previous costs and selling price were collected from

documents in their library and five years sale records. The sample retained for this study was
marketing organisations involved in the sales of honey from the Montane forest for a minimum

of five years

2.3. Analytical Framework

Marketing cost and profit margins of the reference product (one litre of honey) were calculated

using methods previously described (Shepherd, 1993; Smith 1981). Descriptive and multiple

regression analyses were used to determine the pricing strategies of the traders. Excel micro-

software and SPSS computer programme were used to carry out the analysis.

2.3.1. Marketing cost calculation

Assuming all other costs constant, the total cost incurred in putting a litre of honey on the market

was calculated using the following equations:

фc = Mc +Ψ ÷ Cr - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (1)

Mc = Pc ÷Cr + Hc + Tc- - - - - - - - - - - - - - - - - - - - - - - - - - (2) Where:

фc = total cost incurred for putting a litre of honey on the market;

Ψ = cost of a litre of comb/partially drained honey; Mc = marketing cost;

Cr = conversion ratio, it is that quantity of drained honey that can be obtained from a litre of

comb or partially drained honey (Shepherd (1993); Scarborough and Kydd 1992)

Pc = Processing cost, it is the cost incurred by the traders in transforming that quantity of comb

or partially drained honey that will give a litre of drained honey;

Hc = cost of non-recyclable one litre container, bottling and labelling;

Tc = transport cost (cost for transporting a litre of honey from the processing centre to sale

2.4.2. Selling Price of a Litre of Honey

Descriptive statistics was used to determine the factors that influence the pricing strategies. A

multiple-regression analysis was used to measure the effect of these factors on the price of honey

from the following equation:

Υ = λ 0 + ∑ λ iXi + e - - - - - - - - - - - - - - - - - - - - - - - - - - - (3) Where:

Y= Selling price of a litre of drained honey in the different organisations; dependent variable

λ0….λn = Regression coefficients; Xi = Factors affecting pricing strategy; and e = error term.

Fisher Senadecor value (F-value), adjusted regression coefficient of determination (Ř2) and

Student T test value (t-value) at a given probability level and a degree of freedom (n-k), were


2.5.3. Traders’ Profit Margin

Using the market prices per litre of honey, profit margins were calculated following Shepherd

(1993) and Smith (1981) approaches,

Gp = Sp – (Ψ÷Cr)- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (4)

NPM = Gp – Mc - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - (5)

Where; Gp = Gross profit; Sp = Selling price of a litre of honey; NPM = Net profit margin

2.5.4 Profitability

R = (Np ÷ фc) ×100 - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - (6)

R = profitability; it measures the level of net profit margin as a return to total cost.

Profit margin is normal if and only if the return of net profit margin to total cost is equal to or

greater than the minimum interest rate in the area (Scarborough and Kydd, 1992). In the study
area, traders have two accesses to credit: the formal and the informal finance sectors. The formal

sector includes the commercial banks and the microfinance institutions with minimum interest

rate on loan of 21% and 18% per annum respectively. As concerns, the informal sector the

minimum cost of capital is 30% per annum or more. With respect to the principle of minimum

interest rate, 18% is applied in the study as the minimum acceptable level of profit margin.


The findings of the study are discussed under the following headings characteristics and

marketing of honey; cost analysis; price analysis; profit level; profitability and constraints.

3.1. Characteristics and Marketing of Honey

In the Montane forest of North West Province, the two types of honey found are the brown fluid

honey and the cream white/yellow honey. The fluid honey that has varying shades of colours

(dark brown to light brown) and flavour is present in large quantities in the Province. The cream

white/yellow honey principally from Elak-Oku Sub Division is scarce. The variation of honey

conforms with FAO findings that attribute it to the origin of the nectars (FAO, 1986).

To ensure sustainability of any market the traders according to Ignatius and Pableo (1987) should

be able to carry out efficient marketing. All the marketing organisations sell only drained honey

that meet the international quality with respect to the humidity content of <21%. They get their

raw material (comb and partially drained honey) from bee farmers who have been trained on

market oriented honey production.

ANCO gets cream white honey from OHCS, which is the sole processor of cream white honey

that is very difficult to process after 24 hours of harvest. BERUDEP and OHCS sell only brown

fluid and white/yellow cream honey, respectively but ANCO sells both types of honey. The

drained honey is sold in varying measurements (ranging from sachets of 100 grams to containers
of 30 kilograms). The unit of measurement that is transversal and popular is the one litre

container made of plastic or glass materials. Therefore, the reference product used in this study is

one litre of honey. Because of the consistency of the cream white/yellow honey, it is presented

on the market in open-mouthed containers.

3.2 Empirical Results of Honey Processing and Marketing

3.2.1. Cost Analysis

The cost of putting a litre of drained honey on the market varies from one organisation to another

and within each organisation. This variation could be attributable to the conversion ratio,

locational difference, type and form of raw material. Data of five years on the costs, quantity of

raw material (comb and partially drained honey) used and quantity of final product (drained

honey) obtained from the processing centre were used to arrive at the mean conversion ratio and

the cost per litre of raw material. The conversion ratio of comb honey is not constant and

depends on the production and processing techniques used. Low conversion ratio indicates that

more comb honey will be required to get a litre of drained honey. ANCO, BERUDEP and OHCS

used an average of 1.67, 1.96, and 1.72 litres of comb honey respectively to get a litre of drained

honey. The conversion ratio for partially drained brown fluid honey depends on the quantity of

debris that it contains. ANCO and BERUDEP used an average of 1.06 and 1.03 litres of partially

drained brown fluid honey to get a litre of drained honey respectively.

The cost of the raw material depends on the form of the products and location. Table 1 shows

that ANCO, BERUDEP and OHCS bought comb honey at an average cost of 449 (±3) FCFA,

475(±25) FCFA and 616(±36) FCFA per litre respectively. The average cost per litre of partially

drained honey was 1060(±22) FCFA and 1160(±55) FCFA for ANCO and BERUDEP

The transportation cost was not imputed in the calculation because all the organisations have

their sale points just next to their processing centres and as such incur no transportation cost.

Honey processing is still at the artisan stage for all the organisations. None of the organisations

was able to give the exact processing cost because they do not keep records of all the costs they

incur during processing. Processing honey along side other activities and selling honey with

other products suggest that the opportunity cost for processing and selling honey is zero.

Five years sales record (1999-2003) from the different organisations were used to calculate the

mean annual cost they incurred for putting a litre of drained honey on the market.

As concerns drained cream white honey, an annual average cost of 1336 FCFA and 1706 FCFA,

was incurred by OHCS and ANCO, respectively. The high cost incurred by ANCO is linked to

the purchase of processed cream white honey from OHCS, the sole processor.

With respect to brown fluid honey, when the raw material is comb honey BERUDEP spend a

mean annual cost of 1251 FCFA and ANCO spends 902 FCFA for putting a litre of drained

brown fluid honey on the market. The high cost incurred by BERUDEP is attributable to its low

conversion ratio and the high cost of a litre of comb honey in the Belo Sub-Division.

As developmental organisations with principal objective to alleviate poverty in the rural areas

BERUDEP and ANCO advised farmers to pre-process honey before selling to them. Farmers

have been taught how to increase income by processing honey drink and wax for sale from the

chaffs of comb honey. Whereas BERUDEP has 54 volunteers on the field to supervise their

farmers’ processing activities, ANCO depends only on the competence of their members. ANCO

spends a mean annual cost of 1326FCFA to put a litre of drained honey on the market from

partially drained honey, BERUDEP spends 1324FCFA.The high cost of ANCO is attributable to

the high processing cost incurred.

3.2.3. Price Analysis

The honey market is such that marketing organisations unilaterally fix their own price and sell

whatever quantities of honey they can. Table 2 shows the pricing strategies used honey market

organisations. They include factors such as costs (purchasing and marketing), the degree of

competition and profit margins. The degree of competition is considered only by ANCO, which

is located in an urban area where it faces a lot of competition from the daily markets and

supermarkets that sell honey from the Montane forest and other areas.

Though some pricing strategies are common, and the prices have been relatively constant for

many years, the price charged per litre of honey varies by type and organisations. The selling

price of a litre of cream white honey for ANCO and OHCS are 2500 FCFA and 2000 FCFA,

respectively. Whereas BERUDEP sells a litre of drained brown fluid honey at a mean price of

1700 FCFA, ANCO sells it for 1600 FCFA. The low price charged by ANCO is due to the

competition it faces from its urban competitors. BERUDEP, which is located in a rural area,

faces little competition from individual honey traders in the weekly market. The high price

charged for cream white honey is attributed to its scarcity.

The most important price determining factors considered by the organisations are the cost of raw

material and the net profit margin, which could be attributable to the explicit and exact nature of

these two factors. Though the organisations attach importance to marketing cost, it contains

some elements of implicit cost. The extents to which the independent variables explain the

selling price of the organisations vary depending on the raw material. Table 3, shows that when

the raw material is comb honey, about 95 per cent of the selling price is explained by the cost

and net profit margins. When the initial product is partially drained honey, about 89 per cent of

the selling price is attributed to the purchase cost and net profit margins. Given that the F-value
calculated is greater than the critical F-value, we can conclude that the coefficients of multiple

determinations (R2) in the study area are statistically significant at one percent level. From the

statistical significance of the t-values, the purchase cost and profit margins were found to

influence the selling price of honey significantly at 1% and 5% when raw material is comb honey

and partially drained honey respectively.

For any rational trader to stay in business and expand it he should be price efficient by

considering all cost incurred and profit margin in his price determination strategies (Crawford

1997; Smith, 1981). Though the prices per litre of drained honey are the same independent of

the raw materials used, the marketing organisations are rational and efficient. Statistically, the

form of raw materials used and the profit margin significantly influence the prices charged.

3.3. Profitability of the Honey Marketing Organisations

The raw material used has an effect on the return of the net profit margins to total cost made by

the organisations since prices are almost constant. Fig. 1 shows that when the raw material is

comb honey mean annual return of net profit margins to total cost for ANCO, BERUDEP and

OHCS are 75.9%, 35.9% and 49.7% respectively. When the raw material is partially drained

honey the mean annual return of net margin to total cost are 46.5% and 28.2% for ANCO and

BERUDEP, respectively. The profitability is higher when the raw material is comb honey than

when the raw material is partially drained-honey. This is attributed to the low cost of a litre of

comb honey in all the location.

Although the profitability of the organisations varies with respect to the form of raw material and

from one organisation to another, their levels are greater than 18%. Profit margin greater than the

minimum interest rate 18% of the area is an indication of economic efficiency (Scarborough and

Kydd, 1992) and price efficiency (Crawford, 1997; Smith 1981).

3.4. Constraints

Despite the positive profit margins from the sale of honey, the honey marketing organisations

have some problems said to reduce their profit margins. These problems include: the lack of

transportation to expand sales; slow turnover rate, which has led to a loss of credibility with

lending institutions; lack of capital to pay their suppliers on delivery; and lack of packaging


4. Concluding Remarks

The honey market in the North West Province developed after liberalisation, and controlled by

the private sector is thriving very well as shown by the results of this study. It has also been

shown that despite the constraints of capital, and ignorance of consumers as concerns the quality

of honey (bargaining all quality at a low price), inadequate supply and slow turnover rate, the

organisations are price efficient. The level of efficiency varies depending on the form of raw

material. The prices are constant despite the costs incurred. Though organisations unilaterally

fix their prices and sell whatever quantity of honey, they are price efficient since the prices they

charge cover all cost incurred. Variation in cost and constant prices led to variation of net profit

margins to total cost (profitability). The factors underlying price strategy are net profit margins

and price of raw material. Irrespective of the form of raw material, all the organisations are

efficient since their profit level are equal to or greater than the minimum interest rate of 18%. A

comparative analysis of the organisations shows that when raw material is comb honey, ANCO

is more efficient with the highest profitability of 75.9%, followed by OHCS and BERUDEP with

profitability of 49.7% and 35.9% respectively. Nevertheless, when raw material is partially

drained honey BERUDEP is more efficient with a profit level of 28.2% followed by ANCO with
18.8%. Though ANCO buys drained white honey from OHCS, it sells the honey at its own price

and under its own trademark.

In terms of quality, all the organisations respect the Codex 1989 standard of honey with respect

to the level of moisture content. They all use hygrometers for measuring moisture content. In

addition to the quality control, only BERUDEP respects the General Standards for the Labelling

of Pre-packaged Foods. Whereas the labels of OHCS and ANCO carry just their trademark, that

of BERUDEP carries their trademark and the nutritional content of the honey.


The goal of any trader in a marketing system is to attain efficiency. Knowledge of prevailing

prices, quantities, qualities and conditions of sale in the markets are indispensable for rational

production and marketing decisions. Some recommendations that can help improve the price

efficiency and profitability of the honey marketing organisations include:

 Putting in place of an information system for all the stakeholders involved in the honey

marketing system will permit them to better interact to the benefit of one another.

 Creation of honey specialised centres is necessary for the improvement of the marketing

skills as well processing and production know how of those involved.

 Given the minimum interest rate of 18%, the study recommends that drained honey from

comb or partially drained honey should not sell for less than 1550 FCFA per litre if they

have to stay in business.

 Future studies should be carried out on: (i) Possibility of producing cream white honey in

other locations and the publicity of the product;

(ii) cost of honey processing techniques will permit the organisations to know which is

the most appropriate in terms of quality and cost minimisation;

(iii) consumers’ awareness with respect to quality, type, and form of honey from the

Montane forest;

(iv) Producers’ awareness on the type, form, quality, and quantity of honey to produce

and potential buyers of Montane forest honey; and

(v) contribution of the honey sector to the economy of the country.


We are grateful to African Development Bank for funding part of the larger piece of work from

which this paper has been written. Particular thanks to Dr. Mbanya Justin. of IRAD Dschang for

reviewing the draft manuscripts.

Table 1: The cost of a litre (FCFA) of raw material used for getting drained honey


Form of Honey
Comb Honey

Mean 449 475 616

Maximum 450 500 640
Minimum 445 450 560
Standard Deviation 3 25 36
Partially Drained Honey

Mean 1060 1160 na

Maximum 1100 1200 na
Minimum 1050 1100 na
Standard Deviation 22 55 na
Source: Field survey October 2004 (personal communication),
n.a. = not applicable
Table 2: Factors Influencing Pricing Decisions of Honey by Locations
Marketing cost X X X
Cost of the initial product X X X
Price of other organisation X n.a. n.a.
Price in the local market X n.a n.a.
Net profit margins X X X
X = applicable n.a. = not applicable,

Source: Field survey October 2004 (personal communication),

Table 3: Results of Regression Analysis of Factors Determining Pricing Strategies

Form of honey Drained Honey obtained

Drained Honey obtained
from Partially Drained
from Comb Honey
Factors Honey
Purchase cost (Pc) 1.31 0.60

t-value (16.51) (3.81)

Standard Error 0.08 0.16

Net margins (Nm) 0.65 0.65

t-value (7.84) (7.21)**

Standard Error 0.08 0.09

Constant 177.61 751.86

t-value (1.83)* (4.24)

Standard Error 97.29 177.52

R2 0.96 0.91
Ř2 0.95 0.89
Df 2,11 2,7
F-cal 145.9 37.09
F(0.01) 7.20 9.55
Standard error 37.85 27.24
Values in Parentheses are t-values for the corresponding coefficient , Coefficient of multiple determination = R 2
Coefficient of adjusted R= Ř2, ** Significant at 1% level, *Significant at 5% level , Df= Degree of freedom,
F-cal= Calculated Fisher value, F(0.01) = critical fisher value at 1%.
Source: Own computation
Fig 1: Profitability (% ) of the Honey Marketing
Organisations with respect to form of Raw Material


Profitability %



Comb Honey Partially Drained Honey

Form of Raw material

Source: Own computation


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