FACTORS INFLUENCING SMALLHOLDER DAIRY FARMERS’ CHOICE OF MILK MARKETING OUTLET IN KIPKAREN DIVISION OF NANDI COUNTY, KENYA

ABSTRACT
Dairy farming is an important industry in Kenya with an estimated value of Ksh 160 billion and supporting over 1 million households. Commercial smallholder dairy farmers number over one million and produce about 80% of marketed milk in the country. However, the smallholder dairy farmers have had to contend with ups and down in the industry since its liberalization and collapse and revival of the then Kenya Cooperative Creameries (KCC) in 1990s. However, the factors that influence smallholder dairy farmers’ in Kipkaren division to choose one milk marketing outlet over another had not been known thereby making this study necessary. The purpose of this study was to explore the factors that influence smallholder dairy farmers’ choice of milk marketing outlet in Kipkaren division. It is hoped that the findings of the study will improve policy makers understanding of factors that influence smallholder dairy farmers’ choice of milk marketing outlet and serve as a tool to improve the milk marketing system in Kenya. Survey research design was employed in the study with the study area being Kipkaren division of Nandi County. The population of study was made up of smallholder dairy farmers in Kipkaren division who practiced mixed farming. Proportional stratified sampling was employed to determine the number of household heads to be interviewed per location while simple random sampling was used during the actual interview in the field to identify households to be interviewed. The study sample size comprised of 185 household heads and a semi-structured interview schedule was used as the data collection instrument. Descriptive and inferential statistics were used to analyze the data with chi-square test used to determine the relationship between the independent and dependent variables. The findings from the study indicate that the amount of milk produced, the state of the road infrastructure, the services offered by the milk chilling plants and ownership of appropriate means of transport influenced the smallholder dairy farmers’ choice of milk marketing outlet in Kipkaren division. In contrast, the mode of milk payment in urban and rural centres was found to have no influence on the smallholder dairy farmers’ choice of milk marketing outlet in Kipkaren division. The study concludes that smallholder dairy farmers are not just looking for milk price but also, a market outlet offering other services such as credit and inputs. The study recommends that there is need for government support of the dairy marketing groups through capacity building by offering trainings as well as support the groups in contracts enforcement.

CHAPTER ONE
INTRODUCTION
Background Information
The dairy industry plays an important role in the global economy due to its overall contribution to the global economy and its direct importance to the global food security. Due to the intensiveness in dairy production, the dairy sector employs a large bulk of the global labour force, especially in developing countries where numerous smallholder producers are directly involved in dairy industry with minimal technology adoption (Hemme, 2012). In some developed countries, such as New Zealand, the dairy sector has consistently played an important role in the economy by being a major foreign exchange earner and directly and indirectly creates employment. With the systematic increase in the global middle class, especially in the developing countries, it has been estimated that the total global milk demand would drastically increase. In this regard, it has been estimated that global milk production would grow from 692 million tons in 2010 to 827 million tons in 2020 with the bulk of the growth occurring in the developed countries due to the adoption of technology (Knips, 2010).

In Africa, Kenya is one of the largest producers of dairy products with an estimated dairy herd of 3.5 million improved breeds and 9 million Zebus (Ministry of Livestock and Fisheries Development (MOLFD), 2007). The country also has the highest per capita milk consumption in Africa, consuming about 90 kilograms (kg) per capita annually compared to average 25 kg per capita annually in Sub-Saharan Africa (MOLFD, 2007). Dairy farming is one of the most developed sectors in Kenya with estimated annual revenue close to Kenya shillings (Ksh) 160 billion. The milk industry represents between 6-8% of gross domestic product (GDP) and supports over 1 million smallholder dairy farmers’ households (Land O’Lakes, 2009). There are about 600,000 commercial smallholder dairy farmers in the sector most of them in central highlands and Rift Valley. These dairy farmers on average keep 1 to 4 cows and deliver their milk to hawkers/milk vendors, their cooperatives or local milk cooling centers. Notwithstanding, 50% of the smallholder dairy farmers rely on daily milk sales as a source of income (Institute of Economic Affairs (IEA), 2001). Therefore, the dairy sector is critical for development and poverty alleviation in Kenya.

The dairy sector in Kenya has undergone a lot of changes and challenges before and after independence. Before independence and up to 1969, the dairy sector was largely unregulated with the then Kenya Cooperative Creameries (KCC) formed in 1925 playing a dominant role in milk processing and marketing. Indigenous Africans were not allowed to be involved in commercial dairy production until 1954 when the Swynnerton plan allowed them to produce and sell milk to KCC on quota basis (Jaffe, 1995). Starting with privatization of Artificial Insemination (A.I) services in 1980s, the government fully liberalized the monopoly of the giant KCC in milk marketing in urban areas in 1992 (MOLFD, 2007). With liberalization, there was entry of various processors and marketers in the sector bringing about competition and thus the start of decline of KCC and its eventual collapse in 1999. The collapse of KCC changed milk marketing system from a highly controlled production and marketing chain supported by the government to a market system with multiple players subject to forces of demand and supply.

The liberalization of the dairy sector in 1999 brought the sector into disarray with most smallholder dairy farmers losing out. Liberalization led to collapse of KCC which was the main milk marketing outlet for smallholder producers. Although KCC was later revived in the year 2001, the period of its demise led to the growth of other milk processors thereby increasing milk marketing avenues for smallholder farmers’. Concurrently, the informal milk marketing outlets, comprising of milk hawkers, transporters and others, also grew tremendously and became the preferred marketing outlet for the smallholder dairy farmers. With this in mind, this study set to explore the factors that influence smallholder dairy farmers’ choice of milk marketing outlets in Kipkaren division in Nandi County. The factors that were explored included: the amount of milk produced by the smallholder farmers, the state of road infrastructure, the ownership of means of milk transport, the influence of services offered by milk chilling plants and the mode of milk payment in urban and rural centers on the smallholder farmers’ choice of milk marketing outlet. A set of objectives and subsequent hypothesis were developed to explore the influence of the above listed factors on the smallholder dairy farmers’ choice of milk marketing outlets in Kipkaren division.

Statement of the Problem
As indicated above, the dairy sector in Kenya has undergone a lot of challenges especially immediately before liberalization in 1992 and after the collapse of KCC in 1999. Through the structural adjustment programmes (SAP) proposed by the external donors, The World Bank and International Monetary Fund (IMF), the government embarked on privatization and economic liberalization agenda from mid 1980s. This led to eventual liberalization of the dairy sector in 1992. Liberalization brought about the entry of other milk processors ensuring diverse marketing outlets in Kenya. In Kipkaren division, with its proximity to three urban centres, Eldoret, Webuye and Kakamega, the farmers have access to various milk marketing outlets to which they market their milk. However, the factors that influences smallholder dairy farmers’ in Kipkaren division to choose one milk marketing outlet over another has not been known for long. Different studies have looked at the trends, growth and impact of the dairy sector in Kenya but none had conclusively analysed the factors influencing smallholder dairy farmers’ choice of a marketing outlet in Kipkaren division. There was, therefore, an existing knowledge gap that this study aimed to fill.

Purpose of the Study
The purpose of this study was to explore the factors that influence smallholder dairy farmers’ choice of milk marketing outlet in Kipkaren division of Nandi County in order to understand what drives the smallholder dairy farmers in the division to choose one market outlet over another.

Objectives of the study
The objectives that guided the study were to:

1) Describe the socio-economic characteristics of the smallholder dairy farmers in Kipkaren division and the existing milk marketing outlets in the division.

2) To determine the influence of the amount of milk the smallholder dairy farmers’ produces on their choice of milk marketing outlet.

3) To determine the influence of the state of road infrastructure on smallholder dairy farmers’ choice of milk marketing outlet.

4) To determine the influence of ownership of means of milk transport on the smallholder dairy farmers’ choice of milk marketing outlet.

5) To determine the influence of services offered by the milk chilling plants on the smallholder dairy farmers’ choice of milk marketing outlet.

6) To determine the influence of the mode of milk payment by urban milk consumers (Eldoret, Kakamega, and Webuye) and farm gate buyers on smallholder dairy farmers’ choice of milk marketing outlet.
Hypotheses of the Study

The hypotheses of the study were:
H01. The amount of milk the smallholder dairy farmers produces has no statistically significant influence on the choice of milk marketing outlet in Kipkaren division.

H02. The state of road infrastructure has no statistically significant influence on smallholder dairy farmers’ choice of milk marketing outlet in Kipkaren division.

H03. The ownership of the means of milk transport to the market has no statistically significant influence on smallholder dairy farmers’ choice of milk marketing outlet in Kipkaren division.

H04. The services offered by the milk chilling plants have no statistically significant influence on the smallholder dairy farmers’ choice of milk marketing outlet in Kipkaren division.

H05. The mode of milk payment at the farm gate and in urban centres (Webuye, Kakamega, and Eldoret) have no statistically significant influence on smallholder dairy farmers choice of milk marketing outlet in Kipkaren division.

Significance of the Study
Efficient marketing structures have been cited by the World Bank as one of the key pillars in improving smallholder farmers’ earnings (World Bank, 2008). This in turn has the potential of reducing rural poverty and inequality within regions especially among the smallholder farmers by enabling them to sell their produce to better paying markets. Milk production is mainly a rural based enterprise and as such, to the smallholder dairy farmers’, the most important issue is a fast and efficient system of milk delivery to the market at minimal cost (Danish International Development Agency (DANIDA), 1991). Understanding the dairy marketing system as well as the factors influencing smallholder dairy farmers choice of milk marketing outlet was deemed significant for the study because of the potential to influence policy thus bringing about efficient marketing system for the smallholder dairy farmers. Similarly, it is hoped that the findings from the study, has brought out an understanding of smallholder dairy farmers milk marketing needs and the resultant report will be key to further research in the area of milk marketing in Kenya..

Scope of the Study
The study was restricted to 185 smallholder dairy farmers’ households in Kipkaren division of Nandi County. The smallholder dairy farmers explored were the ones keeping between 1-4 dairy cows. The findings of the study were generalized only for the population in Kipkaren division of Nandi County.

Assumptions of the Study
The study was based on two assumptions:

i. That the smallholder dairy farmers in Kipkaren division marketed their milk to various milk marketing outlets

ii. That the information availed by the interviewed household heads was truthful.

Limitation of the Study
The major limitation to the study was the language barrier between the researcher and the research participants during fieldwork process. This prompted the use of a translator to assist in translating the questions in the questionnaire for the research participants.

For more Community Studies & Extension Projects Click here
===================================================================
Item Type: Kenyan Material  |  Attribute: 77 pages  |  Chapters: 1-5
Format: MS Word  |  Price: KSh900  |  Delivery: Within 30Mins.
===================================================================

Share:

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Search for your topic here

See full list of Project Topics under your Department Here!

Featured Post

HOW TO WRITE A RESEARCH HYPOTHESIS

A hypothesis is a description of a pattern in nature or an explanation about some real-world phenomenon that can be tested through observ...

Popular Posts