Analysis of Integration among Smallholder Dairy Farmers in Lower Central Kenya

Abstract

In Kenya dairy farming accounts for four percent of the country’s Gross Domestic Product (GDP) and fourteen percent of total value of agricultural output thus making it a significant economic activity. Market-oriented smallholder dairy farms in the country tend to be concentrated close to urban centres because the effects of market forces over-ride many production factors. Urbanization creates competition for alternative land uses thus leading to land fragmentation which has a potential negative impact on dairy farming especially in Lower Central Kenya. The resultant diminishing land sizes implies that periurban smallholder dairy farmers have to integrate vertically and horizontally. Integration leads to high gross margins, better choice of market channel and improved market participation thus encouraging commercialization of dairy smallholder farming. Multistage sampling technique was used in collecting data from 288 farmers in Kiambu County in 2012.‘T’ statistics was used to analyze the mean differences of the socio-economic characteristics that distinguish integrated and non-integrated smallholder dairy farmers. Dairy enterprise turnover, percentage of milk sold and external sourcing of milk reveal significant differences between vertically and non-vertically integrated dairy farmers. There are significant differences between horizontally and non-horizontally integrated smallholder dairy farmers in respect to: distance from markets, land parcel sizes, level of formal education, dairy herd size, training willingness to pay for information and cost of production. It is recommended that farmers should establish and strengthen existing associations and integrate vertically and horizontally on the basis of their spatial location and milk output