Abstract
When shortages of dairy products became severe in Kenya early in 1992, prices of dairy products were de-controlled to improve the incentives to producers. The impact of that policy change is examined using the Policy Analysis Matrix (PAM) methodology. A case study of the marketing chain involving small-holder peri-urban dairy producers in the Nyeri region is considered. The price-policy reform removed only between 20 per cent and 30 per cent of the negative policy effects on most dairy producers, depending on the technology used. The market thus remains non-competitive, and a single large dairy processor was the biggest beneficiary of the policy change.
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