Journal of Development and Agricultural Economics
Subscribe to JDAE
Full Name*
Email Address*

Article Number - D2DF09E64784

Vol.9(7), pp. 168-177 , July 2017
DOI: 10.5897/JDAE2017.0813
ISSN: 2006-9774

Full Length Research Paper

Dairy farmer households’ farm gate milk price heterogeneity in Kericho County, Kenya

Elijah K. Ng’eno
  • Elijah K. Ng’eno
  • Department of Agricultural Biosystems and Economics, University of Kabianga, Kenya.
  • Google Scholar

 Received: 30 January 2017  Accepted: 10 May 2017  Published: 31 July 2017

Copyright © 2017 Author(s) retain the copyright of this article.
This article is published under the terms of the Creative Commons Attribution License 4.0

This study aimed at identifying factors affecting farm gate milk price heterogeneity in dairy farmer households in Kericho County, Kenya. Multistage cluster sampling technique was used to collect data from 432 dairy farmer households. To estimate survey data, multivariate probit and selectivity biased mixed-effects linear regression models were used. Results showed that increased daily milk output sold and number of commercial milk buyers resulted in increased probability of farm gate milk price variability by 3.8 and 12%, respectively. However, number of milking cows and trust levels on commercial milk buyer by seller decreased farm gate milk price heterogeneity by 89 and 87%, respectively. While selling through commercial, milk buyers had significant positive effect on farm gate milk price, majority of dairy farmer households were hesitant to engage with them since milk buyers valued supply security which came from trusted relationships and contracts. Therefore, critical strategies to improve farm gate milk prices are needed. These include strengthening of dairy farmer groups and partnership development, bolstering milk cooperative societies and increased financial investments in livestock milk markets by national and county governments.
Key words: Farm gate milk price, price heterogeneity, mixed-effects linear regression, dairy farmer households, Kericho County, Kenya.

Anderson DR, Sweeny JD, Williams TA, Freeman J, Shoesmith E (2007). Statistics for business and economics. 9th Edition. Thomson Learning. Thomson Press (India) Ltd.


Beneberu TK, Girma AH (2011). Determinants of Sheep Prices in the Highlands of Northeastern Ethiopia: Implication for Sheep Value Chain Development. Addis Ababa, Ethiopia. 



Bryk AS, Raudenbush SW (2002). Hierarchical Linear Models: Applications and Data Analysis Methods (Advanced Quantitative Techniques in the Social Sciences) (2nd Ed.). Stanford: Sage Publications.


Business Daily (2014). Kenya Dairy Board plans to regulate raw milk prices, p. 12. Nairobi.


FAO (2011). World Livestock 2011: Livestock in Food Security World. (A. McLeod, Ed.). Rome, Italy: FAO.


Gorton M, White J (2007). Transformation and Contracting in the Supply Chains of the Former Soviet Union: Evidence from Armenia, Georgia, Moldova, Ukraine and Russia. Global Supply Chains, Standards and the Poor", Wallingford, Oxfordshire: CABI Publishing.


Greene WH (2003). Econometric Analysis (5th ed.). Upper Saddle River, NJ.: Prentice Hall, Upper Saddle River, NJ.


Gujarati DN (2004). Basic Econometrics. 4th Edition, New York: Tata McGraw Hill Publisher.


Harville DA (1977). Maximum Likelihood Approaches to Variance Component Estimation and to Related Problems. Am. Stat. Assoc. 72:320-338.


Heckman JJ (1979). Sample Selection Bias as a Specification Error. Econometrica (Vol. 47). The Econometric Society. Retrieved from 



ILRI (2011). Towards priority actions for market development for African farmers. In Proceedings of an international conference, Nairobi, Kenya,13-15 May 2009. Nairobi, Kenya. P 400. Retrieved from 



Jari B (2009). Institutional and technical factors influencing agricultural marketing channel choices amongst smallholder and emerging farmers in the Kat River Valley. Afr. J. Agric. Res. 4(11):1129-1137.


Kenya Dairy Board (KDB) (2015). The Kenyan Dairy Industry at a Glance. 



Laird M, Ware JH (1982). Random-effects models for longitudinal data. J. Biomet. 38(38):963-974.


Liefert W, Liefert O (2007). Distortions to Agricultural Incentives in Russia. Agricultural Distortions Working Paper 08, (No. 08). Washington, DC.


McFadden D (2000). Economic Choices. Economic Science. Berkeley, USA.


Muricho G, Kassie M, Obare G (2015). Determinants of Market Participation Regimes among Smallholder Maize Producers in Kenya International Maize and Wheat Improvement Center, Kenya (No. 12).


Sadler M (2006). Comparative analysis of cotton supply chains in Central Asia. In: Swinnen, J.F.M. (Ed.), Case Studies on Vertical Co-ordination in Agrofood Chains in Europe and Central Asia, ECSSD. Washington, DC: World Bank.


Sauer J, Gorton M, White J (2012). Marketing, Cooperatives and Price Heterogeneity: Evidence from the CIS Dairy Sector. Agric. Econ. 43(2):165-177.


Swinnen MM, Maertens JF (2007). Trade, Standards and Poverty: Evidence from Senegal. Oxford, UK.



APA Ng’eno, E. K. (2017). Dairy farmer households’ farm gate milk price heterogeneity in Kericho County, Kenya. Journal of Development and Agricultural Economics, 9(7), 168-177.
Chicago Elijah K. Ng’eno,. "Dairy farmer households’ farm gate milk price heterogeneity in Kericho County, Kenya." Journal of Development and Agricultural Economics 9, no. 7 (2017): 168-177.
MLA Elijah K. Ng’eno,. "Dairy farmer households’ farm gate milk price heterogeneity in Kericho County, Kenya." Journal of Development and Agricultural Economics 9.7 (2017): 168-177.
DOI 10.5897/JDAE2017.0813

Subscription Form