Influence of Credit Management on Financial Performance of Dairy Marketing Cooperatives in Kenya

Gitau Beth Njeri

doi:10.11648/j.ijafrm.20210601.12

Abstract

Agriculture development is the most critical sector for most Sub-Sahara African countries owing to its significance in food security and employment creation. Dairy cooperative societies are central to sustainable development as they are mainly intended to empower the communities especially in rural areas where agriculture is the main stay. According to United Nations estimates, the cooperative movement has brought 800 million people together globally. Dairy farmers have relied more heavily upon dairy cooperative societies to market their milk than have farmers of any other commodity. However, these cooperative societies are faced with various challenges especially after liberation and most cooperative societies in Kenya are under performing as compared to other cooperative societies in similar regions. However, most of the populations in the major production regions live below a dollar a day. This study sought to determine the influence of credit management on financial performance of Dairy cooperatives in Kisii, Nyamira, Bomet and Kericho Counties, Kenya. The study design is descriptive panel research design. Secondary data was used for analysis. The target population was four dairy marketing cooperatives with a total population of one thousand two hundred and forty five (1,245) dairy farmers registered as at December, 2018 by the Commissioner of cooperatives in Kenya in Kisii, Nyamira, Bomet and Kericho counties which also formed the study target units. Census sampling was used to select sample of the population. Secondary data over the ten year-period covering 2009-2018 was obtained. Data was collected using secondary data collection sheet and analyzed using multiple panel regression models. Limitations faced during data collection included high illiteracy levels amongst cooperative members. This was controlled by taking the officials through the facets of credit management to have them understand the concepts under enquiry. The study findings showed that credit management had significant influence on return on investment, a measure of financial performance of dairy marketing cooperatives in Kenya and tests for significance also showed that the influence was statistically significant. The study therefore recommends that all dairy marketing cooperative officials and members be trained on credit management aspects.

Highlights

In United State of America, dairy cooperative societies were among the first type of agricultural cooperative societies to be organized and they have their beginning in the early 1800s, [8]
The main objective of the study was to analyze the effect of working capital management on financial performance of dairy marketing cooperative societies in Kenya
The analysis results of secondary data show that credit management has significant effect on financial performance of dairy marketing cooperatives at 5% level

Summary

Introduction

In United State of America, dairy cooperative societies were among the first type of agricultural cooperative societies to be organized and they have their beginning in the early 1800s, [8]. Dairy cooperative societies have played a very significant role in the procurement, processing and marketing of milk and dairy products and in representing farmers politically at both the state and national level. In Africa Cooperative development is phased into two eras, the post-independence 1960’s to 1980s and liberalisation era in early 1990’s. In both phases, legal frameworks gave African governments powers to direct and manage the affairs of the cooperative societies, which enjoyed monopolies in trade, were rarely truly voluntary, autonomous or independent. Legal frameworks gave African governments powers to direct and manage the affairs of the cooperative societies, which enjoyed monopolies in trade, were rarely truly voluntary, autonomous or independent They were subsequently engulfed into state politics [12]. The African smallholder farmers fought for formation of their own Cooperative societies and later the dairy cooperative

Objectives

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Results

Conclusion