Assessment of the Structure and Performance of the Milk Value Chain in Western Kenya
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Date
2015-11
Authors
Omondi, Simon Peter Wanjala
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Western Kenya Counties of Busia, Bungoma, Kakamega and Vihiga experience
persistent milk deficit and low commercialization on smallholder farms. Information
and knowledge on sources and points of inefficiency along the dairy value chain that
contribute to low milk production and hence persistent milk deficit are scanty. The
main objective of this study was to assess the structure and performance of the milk
value chain in the region to determine market opportunities, variables influencing
milk production, sources of inefficiencies and an upgrading strategy. An
explanatory research design was used to collect both quantitative and qualitative
data from 385 consumers and seven institutions in the four Counties and;400 dairy
farmers, six focus groups and twelve key informants in Butula and Butere Sub
Counties using a stratified proportional random sampling technique. End market tool
kit and' descriptive statistics; Household Commercialization Index, Pearson's
correlation and multiple linear regression were used to analyse data on markets,
farm assessment and upgrading strategy respectively. The findings on markets
revealed that the region's milk deficit was about 177 million litres per year with
demand estimated to be 392 million litres per year against an annual production of
215 million litres. Quality and price were found to be the most important attributes
significantly influencing choice of milk supplier (p<O.OO1). There was low milk
supply in cooperatives with only 8.5% out of the installed cooler capacity of about
27600 litres utilized. Compared to households, hotels and institutions, cooperatives
when restructured into business entities, were found to be the best milk market in an
upgrading strategy. The level of commercialization in the region was found to be
39%, with low input household index of 32%. The mean milk yield per cow per day
was 6.5 litres, with89% of the farms producing less than 10 litres of milk per cow
per day, while yield per cow per year was 1240 litres. There was a positive and
significant linear relationship between eight variables and milk production. The
most important predictors explaining variations in milk production were: Fodder,
dairy meal, credit, Al services, improved research technologies, group membership,
policy and returns from milk sales. Collectively, they explained 63.9% of the
variance, out of which 51% was explained by fodder and dairy meal combined. The
model was highly significant at 1% (Fg, 291= 65.089, p<O.OOl). The main sources of
inefficiencies were found to be institutional.
These findings suggest a linear relationship between value chain components and
milk production and hence may be useful in selecting: a) important variables b)
prioritization c) estimation of impact before actual implementation d) key
stakeholders in an intervention A potential model for improving the structure and
performance of the milk value chain should consist of five levels: integrated input
supply; dairy farmer business clusters, new structured cooperatives, contracted
retailers and an enabling County government policy. The model appears feasible and
could increase average yields to 10 litres per cow per day, increase annual income
per cow from KES 62,000 to KES 126.500, reduce milk deficit by about 51%, with
a benefit-cost of KES 14.14 for every KES 1 invested. The model has practical
significance and could be adopted by the County Governments in Western Kenya to
address the milk deficit problem. Further research should be carried out to validate
the model.
Description
Thesis submitted to the school of agriculture and enterprise development in fulfilment of the requirements for the award of the degree of doctor of philosophy in agribusiness management of Kenyatta University, November, 2015