Profit efficiency of dairy farmers in Kenya: An application to smallholder farmers in Rift Valley and Central Province

Abstract

The dairy industry in Kenya is an important source of livelihood among the smallholder farmers who supply over 70% of the total milk. However, there is a growing concern on rising costs of milk production among farmers. The study assessed profit efficiency of smallholder dairying in the Rift Valley and Central Provinces of Kenya using stochastic frontier analysis for estimating farm level profit efficiency and identifying the specific determinants of efficiency. The results showed that the farmers are fairly profit efficient with an average of about 68%. Cost of fodder produced on farm significantly improved profit efficiency among farmers. However dairy profit efficiency can be enhanced if fodder production is embraced, as well as other supplemental feed technologies that are commensurate with local conditions. Institutional policy reforms on smallholder dairying will help protect the industry and its sustainability for smallholders.

Profit efficiency among peri-urban dairy farms in Odisha: an application of the stochastic frontier function

“…We estimated the profit efficiency using farm-and animal-level cross-sectional household data (Ali and Flinn 1989;Mawa et al 2014;Adamu and Bakari 2015;Lalrinsangpuii et al 2016;Kumari, Chandel, and Lal 2020). Several econometric models estimate profit efficiency, but all make some assumptions and errors in measurement.…”

“…The concept of profit efficiency considers the effects of the choices of production on costs and revenues. The choices of production help to provide complementary information in the analysis of farm-specific profit efficiency (Mawa et al 2014). The concept of profit efficiency is, therefore, broader than that of cost efficiency.…”

Determinants of Profit Efficiency among Rice Farmers in Kilombero Valley, Morogoro, Tanzania

“…Profit efficiency studies were carried out centering on the output quality while taking into account farm-specific prices and fixed inputs for various crops and or production entities in various contexts over time [22,33,34,35,36,37 [38,33,35] Coffee [39] Milk and beef [40,41] and many other agricultural production entities. Social economic variables such as farmer-specific characteristics (age, education, sex, household size), institutional factors such as access to credit, extension services, the existence of memberships and or farmer associations, infrastructure, market facilities, and agricultural inputs dealers.…”

Nutritional Value and Chemical Composition of Selected Fodders; Feed Intervention in Smallholder Dairy Farms in Kenya

“…In Kenya, smallholder dairy farmers generate around 1.8 million jobs along the value chain and produce 80% of the nation's milk. The high cost of producing milk, which is mostly caused by the poor quality of animal feed, and the limited availability of highquality forages throughout the year limit the growth of the dairy industry (Mawa et al, 2014). In Kenya, tropical grasses supplemented with legumes and residues from crops make up the majority of the forages used in livestock diets.…”