Effect of agribusiness support services on choice of dairy cooperative market channel in Kenya

D Okello,C Larochelle,G Owuor,E Gathungu

doi:10.4314/acsj.v28i1.17s

Abstract

Kenya is witnessing an immense increase in number of smallholder dairy agripreneurs sourcing income from the dairy sub-sector. Smallholder dairy agripreneurs who dominate the production sector are forced to sell milk to informal buyers such as middlemen/women, who exploit them by paying less than the market price. As a result of this, the Kenyan Government has made significant efforts to upgrade dairy cooperatives to link the dairy agripreneurs with consumers. In spite of this, milk marketing is still dominated by traditional informal outlets. This study sought to determine the effect of provision of agribusiness support services on choice of dairy cooperative market channel. Data were collected from a cross-sectional survey of 682 respondents from Muranga County in Kenya, using a semi-structured questionnaire. Results revealed that provision of business plan training, group marketing, pregnancy diagnosis and deworming support services had significant and positive effects on the choice of cooperative market channel. In contrast, access to vaccination services and supply of feeds had negative effectson the choice of cooperative market channel. This study recommends strong coordination among the agribusiness support service providers and the dairy cooperatives in order to increase adoption of the cooperative marketing channel. In addition, dairy cooperatives need to redesign their business models to ensure that their members not only receive agribusiness support services, but also get better prices and prompt payments to increase supply of milk to cooperatives by dairy agripreneurs.

Highlights

Dairy farming plays an important role in providing nutrition and source of livelihood to majority of Kenyans
Where: Yi = the probability of household participation in the milk market channel; j = the indicator variable of market channel (0 = cooperative, 1 = middlemen/women, 2 = retailers and 3 = direct to consumer); Xi = the vector of explanatory variables; and βs are the regression coefficients estimated by the maximum likelihood method
A total of 95.2% of the respondents had access to production support services, 56.1% to financial support, 47.2% to group marketing support and only 39.6% of the respondents had access to business plan training support services. These results imply that majority of dairy agripreneurs respondents were keen on getting production support services, which included mainly curative treatment, artificial insemination, pregnancy diagnosis, deworming, vaccination and supply of feeds

Summary

Introduction

Due to lack of efficient marketing systems, 86% of milk produced in Kenya is sold through the informal marketing channels; and the rest to dairy processing companies, through farmer organisations (Mwambi et al, 2018). This depicts the important role played by informal markets that includes middlemen/women and retailers, in ensuring that milk reaches the final consumer. These informal buyers often exploit smallholder dairy agripreneurs, by paying less than the market price (Singh, 2018)

Methods

Results

Conclusion