EVALUATION OF MILK MARKETING BY SAHIWAL FARMERS OF KAJIADO AND NAROK COUNTIES: DETEMINANTS OF PARTICIPATION, OUTLETS CHOICE DECISION AND PRICES

ABSTRACT 
To improve pastoralists’ livelihoods, Sahiwal cattle breed, resilient and dual purpose in nature with the benefits of both improved milk and beef production and better adapted to harsh conditions in Arid and Semi-Arid Lands (ASALs) were introduced by Kenya Agricultural Research Institute (KARI) now Kenya Agricultural and Livestock Research Organization (KALRO). With potential expected increase in milk production, the market profiles are likely to change, yet the underlying factors driving this change are unclear. Using data from a random sample of 320 pastoralist households and 64 milk traders from Narok and Kajiado Counties, this study analyzed factors that influence milk market development in pastoral areas using Structure conduct and performance market analysis model (SCP); Multinomial logit (MNL) model; Double hurdle (DH) model; and Hedonic price model (HP) data were analyzed in order to provide information on possible effects on the output market changes contingent on increased production as a result of increase in number of Sahiwal cattle breed for milk market development. Gini coefficient, Lorenz curve and concentration ratios from SCP show that middlemen and processors dominated in the milk market. The DH results indicated that Sahiwal cattle, increased income and membership to groups increased participation while long distances to markets reduced participation. The MNL results showed that most pastoralists sold their milk to the middlemen and choice of other marketing channels was significantly influenced by total income, distance to the point of sale and group membership. The HP results showed that increased transaction cost reduced the price that the farmers received. Improving physical and market infrastructure, promoting high value marketing points is an intervention that is likely to make the market competitive. Ability to meet transaction costs associated with marketing and increased social capital through group membership is necessary. Reducing transactions cost and ensuring information symmetry by improving social networking among the farmers could improve milk prices.

CHAPTER ONE 
INTRODUCTION 
Background Information 
Agriculture continues to be a major sector of the Kenyan economy; it contributes about 26% of the Gross domestic product (GDP) directly and 25% indirectly, and provides more than 18% of formal employment and more than 70% of informal employment in the rural areas (GOK, 2010). However, the sector is faced with a myriad of challenges that constrain its development to achieve its production potential. These challenges include: limited agricultural land, declining soil fertility and land degradation, inadequate rainfall, lack of suitable crop varieties and animal breeds for the harsh low rainfall environment and high pest/disease incidences (GOK, 2010; Barret et al., 2002). What this means is that any improvements in agricultural productivity would require the development of high impact and suitable agricultural technologies to fully exploit the country’s land, genetic and water resources (GOK, 2010). 

Moreover, the rural populations mostly depend on small scale agriculture for food and income and because of constraints in agricultural production, farmers in rural areas have remained poor (Olwande and Mathenge, 2010). Smallholder agriculture is one of the major areas that can be developed for rural growth and livelihood improvement with the aim of getting large numbers of the rural poor out of poverty (Hazell, 2005). The challenge of improving rural incomes requires some form of revolution out of the semi-subsistence that demands low-input leading to low-productivity in farming systems that are attributes of farmers in rural areas (Jayne et al., 2007). This is even more critical in the arid and semi-arid lands (ASALs) of Kenya. 

The livestock subsector is the most dominant in ASALs and a major source of livelihood for many in these areas contributing 7% to the GDP (GOK, 2010; EPZA, 2007). It comprises mainly dairy, meat, eggs, hides, skins and wool production with meat and milk production being very important both as a source of protein and income. In meat production about 67% of the red meat is produced in the ASALs under pastoral system of production (EPZA, 2007). The dairy section supports many Kenyans mostly in medium and high rainfall areas who mainly rely on it for income from milk sales. The industry is one of the most developed with estimated annual revenue of about US $21 billion, and contributes about 3.3% to the GDP (GOK, 2010). The economic development and employment opportunities created by increased milk production, improved marketing outlet efficiency, and greater consumer demand for affordable dairy products are enormous. Development of effective and efficient dairy marketing is crucial in achieving the twin millennium development goals of reducing poverty and ending hunger in Kenya (Karanja, 2002; GOK, 2010). 

However, dairy production is concentrated in medium to high rainfall areas which mostly support exotic dairy breeds. To increase milk supply from ASALs, exotic dairy breeds cannot be prioritized since they cannot withstand harsh conditions in these areas (Kavoi et al., 2011). Interventions to increase milk supply in the market have however concentrated on medium to high rainfall areas neglecting the ASALs which equally have the potential to supply the market with enough milk. To utilize the milk potential in ASALs, there is a need to increase the number of cattle breeds that are well adapted to the harsh conditions in these areas. Though African indigenous breeds such as Zebu are well adapted to the harsh ASALs climatic conditions, they have low reproduction rate and low milk production for that matter (Peixoto et al., 2006). They show a high frequency of short lactations which is partly due to the inability of the cattle to let down milk in the absence of a calf and also due to low genetic potential of the cow to produce milk for longer periods (Peixoto et al., 2006 ). Sahiwal cattle genetic resources have been prioritized for development through genetic improvement and proper management for use in ASALs particularly under the pastoral production systems (Ilatsia et al., 2006). This is because Sahiwal breeds are dual purpose in nature mainly being utilized for milk and beef production. They have relatively high milk production and growth performance compared with predominant African indigenous breeds. They are also heat tolerant and they have been seen to exploit the dairy potential in pastoral areas (Joshi et al., 2001; Boone et al., 2006). There has been promotion of Sahiwal breed mostly by Kenya agricultural research institute (KARI) now Kenya Agricultural and Livestock Research Organization (KALRO) and this has influenced the value that pastoralists attach to the breed, giving it a priority in pastoral areas (Ilatsia et al., 2011). 

This prioritizing of Sahiwal breed in pastoralist areas is likely to move farmers to the market oriented system of production from semi subsistence system of milk production that is characterized by low input use, low production, poor market participation and market linkages (Jayne et al., 2007). With market oriented production, effective and efficient milk marketing system is important to strengthen milk market linkages among farmers and other milk market actors (Jaleta, 2009). Marketing in pastoralist areas is ineffective and inefficient, likely to mostly characterized by informal marketing outlets such as hawking to hotels, food kiosks and trading centers at low prices (Nyariki et al., 2009). unexpanded milk marketing in pastoralist areas may be attributed to; underdeveloped markets, poor farmers with limited capital to invest in handling and processing equipment and worsening infrastructure, particularly roads (Lightfoot et al., 2005). 

For that reason, any changes in output products for instance increased milk production is likely to impact pastoralist market linkages leading to market development. Farmers selling milk in pastoralist areas incur varied costs upon decisions they make in milk markets. They are likely to decide on market participation, level of participation and prices for milk in the market and make choices of marketing outlet to ensure highest possible benefits. When making marketing decisions, farmers consider such factors as infrastructure condition and distance to markets that are likely to lower benefits and they incur costs to provide best possible trade-off in risk reduction (Dorward, 2004). This study therefore aims at characterizing milk market outlets, determine the factors that influence choice of milk marketing outlets, milk market participation and milk prices for milk market development in pastoral areas.

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Item Type: Kenyan Postgraduate Material  |  Attribute: 99 pages  |  Chapters: 1-5
Format: MS Word  |  Price: KSh900  |  Delivery: Within 30Mins.
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