Journal of
Development and Agricultural Economics

  • Abbreviation: J. Dev. Agric. Econ.
  • Language: English
  • ISSN: 2006-9774
  • DOI: 10.5897/JDAE
  • Start Year: 2009
  • Published Articles: 443

Full Length Research Paper

Profit efficiency of dairy farmers in Kenya: An application to smallholder farmers in Rift Valley and Central Province

Leone Iga Mawa
  • Leone Iga Mawa
  • Department of Markets, Gender and Livelihoods, International Livestock Research Institute (ILRI), P. O. Box 30709-00100, Nairobi, Kenya.
  • Google Scholar
Mutuku Muendo Kavoi
  • Mutuku Muendo Kavoi
  • Faculty of Agriculture, Jomo Kenyatta University of Agriculture and Technology, P. O. Box 62000-00200, Nairobi, Kenya.
  • Google Scholar
Isabelle Baltenweck
  • Isabelle Baltenweck
  • Department of Markets, Gender and Livelihoods, International Livestock Research Institute (ILRI), P. O. Box 30709-00100, Nairobi, Kenya.
  • Google Scholar
Jane Poole
  • Jane Poole
  • Research Methods Group, International Livestock Research Institute, P. O. Box 30709-00100, Nairobi, Kenya.
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  •  Received: 21 January 2014
  •  Accepted: 20 August 2014
  •  Published: 01 November 2014

Abstract

The dairy industry in Kenya is an important source of livelihood among the smallholder farmers who supply over 70% of the total milk. However, there is a growing concern on rising costs of milk production among farmers. The study assessed profit efficiency of smallholder dairying in the Rift Valley and Central Provinces of Kenya using stochastic frontier analysis for estimating farm level profit efficiency and identifying the specific determinants of efficiency. The results showed that the farmers are fairly profit efficient with an average of about 68%. Cost of fodder produced on farm significantly improved profit efficiency among farmers. However dairy profit efficiency can be enhanced if fodder production is embraced, as well as other supplemental feed technologies that are commensurate with local conditions. Institutional policy reforms on smallholder dairying will help protect the industry and its sustainability for smallholders.

 

Key words: Dairy, profit efficiency, stochastic frontier, smallholder farmer.