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.