Productivity trends and performance of dairy farming in Kenya

Abstract

Abstract This study examined trends in milk productivity and performance of the Kenyan smallholder dairy sector using a nationwide representative panel household data (2000-2010) and crosssectional data collected in 2010 in the major milk producing areas. Descriptive statistics and gross margin analysis of the dairy enterprise were used to examine the performance of the dairy sector between zero and non-zero grazing systems, and across different milk sheds. The findings of the study showed a positive trend in milk productivity between 2000 and 2010. However, productivity was higher in higher potential areas and increased up the income quintiles, suggesting that dairy farming could be a preserve of the relatively better off households. Gross margin analysis showed that dairying is an economically viable enterprise in the short-run, with the non-zero grazing system having higher gross margins and therefore, a financial advantage. However, an example of zero grazing for farmers selling milk through the Githunguri farmers’ cooperative society indicated that zero grazing dairying can perform well under conditions of collective marketing, good linkage to markets in terms of processing, access to production information, credit as well as other benefits. Greater commercialization of the dairy sub-sector and an increase in smallholder incomes will come from improved technologies that will make the existing resources more productive, as well as policies and actions that will deal with the seasonal intra-year variations in production which include creation of a strategic milk reserve, investment in processing of long life dairy products and investment in infrastructure such as roads and electricity. Key words: Milk, smallholder dairy enterprise, variable costs, gross margin