Analysis of Determinants of Vertical and Horizontal Integration among Smallholder Dairy Farmers in Lower Central Kenya
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Date
2016
Authors
Mutura, James K.
Nyairo, Newton
Mwangi, Maina
Wambugu, Stephen K.
Journal Title
Journal ISSN
Volume Title
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Science target
Abstract
This study sought to analyze the determinants of vertical and
horizontal integration among smallholder dairy farmers in Lower Central Kenya.
Integration leads to high gross margins, influences choice of marketing channel
and improves market participation, encouraging commercialization of dairy
smallholder farming. A logit regression model was used to determine the
likelihood of a household to integrate vertically or horizontally in its dairy
enterprise. A multistage sampling technique was used, and data was collected
from 288 small holder dairy farmers in Kiambu County. Processing and analysis
of the survey data was carried out using SPSS version 20 and STATA version 12.
Fixed investment cost, storage type, milk cost share, percentage of milk sold and
dairy enterprise turnover were hypothesized to be key factors in explaining a
household’s likelihood to vertically integrate in its dairy enterprise. An increase
in total fixed investments, turnover and volume of output contribute to the
probability of a household integrating vertically. Horizontally integrated
farmers were willing to pay more for market information and had higher
monthly margins. The paper recommends that farmers should establish and
strengthen existing associations and integrate vertically and horizontally on the
basis of their spatial location and milk output.
Description
Research Article
Keywords
Logit regression, Integration, Smallholder farmers
Citation
International Journal of Agricultural and Food Research [IJAFR] Vol. 5 No. 1, pp. 1-13 (2016)