Abstract:
Dairying in Kenya remains a multi-purpose cattle system providing milk, manure
and capital assets to the farmer. Dairy activities in Kenya are predominantly run by
smallholders and are concentrated in the high and medium potential areas.
Smallholders operating 1-3 dairy cows on small farms are predominant in Kenya.
They produce 56% of the total milk in the country and supply 80% of Kenya’s
marketed milk. Estimated growth in the consumption of milk and dairy products in
developing countries is 3.3%, which is in line with Kenya’s 3% per year. National
statistics show that milk production continues to decline. For example, since 2000
milk annual growth rate has been 1.4% compared to 9.2% experienced between
1980 and 1990. The main challenge of Kenya’s dairy industry is how to confront
growing milk demand and a highly competitive export environment when yields are
as low as 195 litres per lactation. One of the key options is to develop a vibrant
competitive dairy sector in Kenya by increasing the efficiency of production. Thus, this
study examined the technical efficiency of smallholder dairy farms of rural Kenya.
Data from a 2005 survey of smallholder farms in five provinces was utilized to
examine the technical efficiency of smallholder farms. The Cobb-Douglas stochastic
production frontier model was used to identify the determinants of technical
inefficiency. The findings revealed that the mean efficiency was 79 percent, which
suggested that 21 percent of production was lost due to technical inefficiency. The
technical efficiency also varied across regions ranging from a mean of 83.9% in
Central region and 72.5% in Nyanza region. Land size, access to extension service,
infrastructure and the level of schooling were found to reduce inefficiency.
