How is quail eggs business a pyramid scheme?

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  • 5 years ago
  • Posted: February 4, 2014 at 1:56 pm

In the last two months the in-thing has been quail eggs. From being the solution to every single problem right from traffic jams to being the active ingredient in Rev Mwasapile’s concoction that made thousands stream to Loliondo village in Tanzania for a miraculous cure, quail eggs have been in the lips of many.

This talk started sometime in January 2013 when the media carried a story of Philip Gichohi who ventured into the business of supplying quail eggs to Nairobi’s four star hotels, selling one for Kshs 15 yet the demand was so high he could not sustain. The unsatisfied demand forced a number of Kenyans to quit their jobs and venture into the quail eggs business. A few lucky ones were able to make millions by selling the eggs for as high as Kshs 130 per egg at a negligible production cost. Part of this high demand was driven by the new entrants into the sector, not as consumers, but as producers. Then the time for the many producers to find end-consumers arrived…and the bubble happened.

From this year a number of quail eggs farmers have been crying foul over the losses they continue to sustain due to over supply of quail eggs yet demand has largely remained the same. Last week a woman approached me with a proposal to supply the quail eggs at Shs 5 each, the lowest supply price I’ve seen so far.

The bubble has led to quail eggs being branded a pyramid scheme not only in social media but also by some experts. Writing in The Star, Collins Wanderi who describes himself as a Certified Fraud Examiner says, “The [quail egg] business has all the traits of a multi-level marketing or pyramid scheme”.

So how is quail eggs business related to multi-level marketing or pyramid schemes? Mr. Wanderi doesn’t draw any parallels between a multi-level marketing/pyramid scheme and quail eggs business at all, he simply puts up an assumption. We have described Multilevel Marketing (MLM), Pyramid Schemes and Ponzi Schemes in the article DIPEK is nothing but buzz words. In summary, MLM is a marketing strategy that requires a sales person to recruit another sales person in order to earn a commission on sales done by the recruit. If the recruit recruits a third level sales person(s), the the first level still earns from the third level…and the chain continues downwards mostly up to 12th generation.

A pyramid scheme is similar only that there is nothing being sold. People join the scheme by registering and members are paid from the registration fees. A Ponzi scheme on the other hand is an “investment” platform where investors are promised over 100% interest within a period of lets say three weeks then a few months or years later, the owners of the scheme disappear with most the cash invested especially by late/last investors.

The collection of chameleons in April 2005 by Nyeri farmers in hope of selling them at Kshs 1,200 to Kshs 1,500 to some white businessmen as described by Mr. Wanderi can be related to a Ponzi Scheme. However, the quail eggs business is far from any form of conning as quail eggs are legitimate products with legitimate demand. Those who ventured into the business in early 2013 made their millions as the existing demand by then was too big for the existing supply.

But as people left their other businesses and jobs to venture into quail eggs farming, the supply far outstripped demand leading to a bubble whereby prices of quail eggs dropped by more than 95% in under six months. This huge drop in price means there are number of farmers who cannot recoup their investments hence the cries. The farmers who have suffered losses and can’t sustain the business are being forced out.

As many farmers continue to drop from the business, and assuming demand remains the same or even improves over the next few months, it will reach a point where market equilibrium is achieved. At this point, the farmers who shall have remained in the business will be able to comfortably supply quail eggs at market demand levels above break-even price points.

In short, given the articles I have read so far and first hand stories I’ve heard about quails and quail eggs, their is nothing pyramid nor MLM in the quail eggs business. It is a legitimate form of business suctioned by the government that stand a chance to be a worthy competitor of the chicken eggs business.

What is your opinion on the topic?
Odipo Riaga
Managing Editor at KachTech Analytics Ltd
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Odipo Riaga is a Technology Blogger interested in emerging tech such as VR and AR, AI, Life Extension, Exponential Biotech, Immortality, Cyborgs and many others.
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