An Analysis of Social-Economic Factors Contributing to Reduced Milk Marketing in Nyeri East District, Kenya

UNIVERSITY OF NAIROBI DEPARTMENT OF AGRICULTURAL ECONOMICS SPECIAL PROJECT & ORAL PRESENTATION (AEC455) DRAFT OF THE FINAL REPORT AN ANALYSIS OF SOCIAL-ECONOMIC FACTORS CONTRIBUTING TO REDUCED MILK MARKETING IN NYERI EAST DISTRICT, KENYA

WACHIRA DICKSON MAINA A22/0004/2009

SUPERVISOR: DR NYIKAL

CELL: 0712274454 EMAIL: [e-mail]

ACKNOWLEGEMENTS
I wish to acknowledge my parents for their moral and financial support to enable my accomplishment of this work.
I also wish to acknowledge my research respondents who willingly and selflessly provided me with the required data.

ABSTRACT This research is devoted to analyze the problem of reduced milk marketing in Nyeri East District which has been underway over the past three years. The research has evaluated both the social and economic factors which may have favored this condition.
Interview was the only method that was used to get primary data, where individual rather than groups were consulted. Data analysis was through Microsoft excel, from which relationships between various variables was obtained.
Various economic factors, with differentiated magnitude were indentified and attributed by the researcher to the cause of the problem. Social factors are viewed as to have minimal weight in the cause of the problem.
The research has also gone further to identify some other relevant areas that needs research work carried out.

Table of Contents 1.0 INTRODUCTION 5 1.1 BACKGROUND INFORMATION 5 1.2 PROBLEM STATEMENT: 7 1.3 OBJECTIVE: 7 1.4 RESEARCH QUESTIONS: 8 1.5 JUSTIFICATION: 8 2.0 LITERATURE REVIEW 9 2.1 REVIEW OF RELATED LITERATURE 9 2.1.1MILK MARKETING CHANNELS AND THEIR ADOPTION BY DAIRY FARMERS 10 2.2 CONCEPTUAL FRAMEWORK 12 3.0 METHODOLOGY 13 3.1 Description of the area of study 13 3.1.1 Selection of the study site 14 3.2 Research design and sampling procedure 14 3.3 Data collection 15 3.4Data analysis 16 6.0 APPENDICES 26 7.0 REFFERENCES 29

1.0 INTRODUCTION
1.1 BACKGROUND INFORMATION

Kenya is classified second best milk producing country in Africa after South Africa which is the leading producer of milk for both consumption and export. Milk production in Kenya has significantly increased from 2 billion litres per annum in 2002 to 5 billion litres per annum in 2011 (Ministry of Agriculture, 2012). About 80 percent of the total milk produced in Kenya comes from smallholder dairy farmers who have ventured in dairy farming as a business, while 20 percent is contributed by medium and large scale farmers who are mainly found in the drier parts of the country. According to Omore et al, (1999) and Omiti and Njoroge, (2002) independently, the dairy industry forms a significant part of the rural economy with an estimate of over 600,000 small holder farmers who derive their livelihood from the sector. Zero grazing to a great extent prevails in small holding since the farmers lack enough land to provide enough pasture for their animals.
Two types of marketing systems do exist in Kenya, formal and informal marketing system. The formal marketing system is where the institutions involved are licensed and controlled by the Kenya Dairy Board and allowed to transact business with dairy farmers. The sector mainly deals with receipt of milk from farmers, directly or through farmers’ cooperative, processing and distributing the products to the consumers as whole milk and other milk products. Prior liberalization Kenya Cooperative Creameries (KCC) was the main player in the formal sector, though other players such as Meru Central Farmers Cooperative Union (MCFCU) and Kitinda Dairy Farmers Cooperative Society (KDFCS) also participated in the sector but later collapsed. Currently more cooperatives have joined the sector due to anticipated increase in profit. Informal marketing system on the other hand involves the sale of raw milk from the producers to the consumers directly or through marketing agents. It is characterized by presence of Farmers Dairy Cooperative Societies (FDCS) who have the mandate to collect and deliver milk to the consumers on behalf of the farmers. The system is very important both in the rural and urban areas although Kenya Dairy Board warrants ensuring maximum milk processing takes place. During the periods of excess milk the informal sector does collude with the formal sector by the former supplying excess milk for processing. Out of the total milk produced in Kenya, 10 percent is consumed by calves, 34.5 consumed on-farm while 55 percent is marketed, (FAO, 2007). Out of the total milk marketed 60 percent goes through the informal sector while 40 percent undergoes processing, (Techno Serve Kenya, 2008)
In Nyeri East County farming is the main economic activity which is mostly operated manually due to the small size of the land parcels. Tea farming is the main income earning activity in the region although in the past two decades coffee farming was the major income earner. The collapse of the international coffee agreement occurred in 1988 leading to low income offered to farmers due to reduced export prices for coffee. As a result horizontal diversification occurred and consequently dairy farming became a prominent activity (Mataru, 2002). Currently dairy farming is most practiced through smallholdings where land acreage ranges between 0.7 and 2 acres, an indication of land scarcity and as a result zero grazing is prominent (S. Wambugu and L. Kirumi 2010).
1.2 PROBLEM STATEMENT:
The role of dairy industry in the development of Kenya’s economy through contribution in agricultural GDP as well as source of livelihood for more than 600,000 small holder farmers has been observed (Omiti J. et al 2002). To boost this sector, appropriate measures should be adopted to harmonize the interactions of all participants, which can be done through advocacy of complimentary rather than competitive interaction.
As documented by Wambugu and Kirumi (2010), the proportion of milk sold to the total output in Nyeri is low compared to that in Kiambu which is 88 percent. This is an indication of low marketing despite the high milk production in the area.
Statistics from the Ministry of livestock, Nyeri district shows that there has been a slight decline in the milk marketed in the area over the recent past. Milk marketed in 2009 was recorded as the highest with an estimate of 67,450 litres, while in the year 2011; only 59,753 litres were marketed, which exhibits a decline. The decline in milk marketed may be an indication of reduced farmers production or presence of disincentive to market the milk. There is no adequate documentation in the area to explain the condition and therefore this research will be essential to provide the relevant information.
A study was conducted in Kiambu County on the factors affecting farmers’ choice of milk marketing channels and the researchers came up with several factors ( Mburu et al 2007). Kiambu is located in the peri-urban region at the outskirts of Nairobi city while Nyeri East, the chosen area of study is located in the rural area away from major towns and therefore the contributing factors may not be similar since peri-urban regions has direct effect from the adjacent huge population.
Milk marketing in the region is characterized by farmers selling their milk either to itinerant personnel among them, hawkers, and neighbors or in hotels or to milk processing firms either directly or through farmers’ cooperatives. These cooperatives acts as middle men between the farmers and processing plants and therefore reduce the amount received by dairy farmers. Podaga dairy cooperative is one of the farmers’ organizations in Nyeri that play the role of middle men between farmers and Brookside dairy. Brookside is a well-known milk processing entity in East Africa, with branches in different parts of Kenya among them Brookside dairy in Nyeri. It collects milk directly from farmers or through farmers’ cooperatives. In the year 2012 Brookside increased its farm gate prices from Ksh. 24per litre to Ksh. 27 per litre with the aim of encouraging farmers to increase in their milk supply.

1.3 OBJECTIVE:
General Objective
To analyze social and economic factors contributing to reduced milk marketing by smallholder farmers in Nyeri East District, Kenya.
Specific objectives: a. To identify and characterize the social factors contributing to reduced milk marketing in Nyeri East District. b. To identify and characterize the economic factors contributing to reduced milk marketing in Nyeri East District.

1.4 RESEARCH QUESTIONS: a) What social factors contribute to the reduced milk marketing in Nyeri East District? b) What economic factors contribute to reduced milk marketing in Nyeri East District?

1.5 JUSTIFICATION:
Dairy sector is currently gaining popularity in Kenya since it is incorporated as one of the icons in the vision 2030, aimed at fighting food security in the country. To ensure this, partnership of the government and the relevant NGOs need to be advocated for, to ensure the sector is well equipped to meet the current rising milk demand.
The sector in Kenya contributes significantly to the economic growth of the country. It accounts for 4 percent of the GDP as well as source of employment opportunities to many Kenyans (Ministry of Agriculture, 2012). It is a source of raw materials for processing industries which manufacture food products and therefore contribute in fighting hunger in the country. It is therefore necessary to engage in any undertakings that will help improve the sector.
Dairy farming is a source of livelihood for most smallholder farmers in Nyeri County. Almost each and every household has at least one dairy cow which they depend on for daily milk supply for household consumption, as well as source of income to cater for daily expenses ( Wambugu and Kirumi 2010). Income from cash crops like coffee and tea are not received regularly and therefore the need for farmers to diversify their income source to dairy farming. It is therefore necessary to ensure increased investment in the sector through creation of incentives that boost farmers’ investments which is possible by adopting more efficient markets.
Understanding the factors affecting milk marketing in an area is critical to implementation of appropriate policies and programs and success of dairy industry ( Mburu, Wakhungu, and Gitu, 2007). The knowledge may also be utilized by the Ministry of Agriculture in collaboration with other relevant stakeholders in the provision of extension education, especially on the marketing channels to adopt to increase on profitability.

2.0 LITERATURE REVIEW
2.1 REVIEW OF RELATED LITERATURE Kenya dairy sector has been changing rapidly as a result of progressive liberalization of veterinary services of 1990, liberalization of milk prices of 1992 and entry of private dairy processers in to the dairy market. Studies by Ouma et al (1999) have shown that traditionally cattle were kept for milk and meat as well as draught power, manure, prestige, marriage dowries and sacrifices. Recently dairy cattle are mainly kept for milk since agriculture has advanced from being a prestigious practice to an agribusiness venture meant to earn income. During the pre-colonial era very few Kenyans owned high quality dairy cattle as the sector was under the control of Europeans. The Europeans under the leadership of lord Delamere owned almost all exotic breeds in Kenya where in 1925 they formed the Kenya Cooperative Creameries (KCC) whose main aim was to process milk products for export purposes to the European countries. A turning point occurred in 1954 as a result of formulation of the swynnerton plan. The plan advocated for the development of African small holder in many agricultural ventures among them improvement of animal breeds. As a result Kenyans were allowed to rear exotic breeds which by then were recognized as high quality breed. The small holder advancement in the sector was hindered by constraints of limited capital to purchase and maintain the dairy cattle. However by 1990, 60% of the dairy breeds were owned by smallholder dairy farmers (Chema 2000). Kenyans especially kikuyu were employed in the European farms to care for the dairy cattle through which they learnt the new technologies meant to improve the sector. This led to the advancement of the smallholder dairy sector and nowadays smallholder dominates the milk industry in Kenya with an estimated share of 80% of the total dairy cattle in Kenya. 2.1.1MILK MARKETING CHANNELS AND THEIR ADOPTION BY DAIRY FARMERS Two types of milk marketing channels exist in Kenya. Formal sector is characterized by farmer’s cooperatives which are registered under the company’s act cap 486. They contract with dairy farmers to sell their milk which is collected daily and farmers get their pay monthly. The second sector is the informal sectors which is characterized by farmers selling their milk to itinerant personnel i.e. through hotels, neighbors and hawkers and get their pay daily or weekly. According to LM. Mburu et al (2009), a study carried out in Kiambu showed that the probability of milk marketing through cooperatives decreased as the total land size increased. The same conclusion was made by Alene et al (2008) and Omiti J. et al (2009). This may not actually be the case when taken in the perspective that as the total land size increases, milk production increases on assumption that the number of herd increases with increase in land size. As a result of increased milk supply the farmers will opt to sell their milk through the cooperative societies since the informal sector may not be able to assimilate the total supply. The researcher’s argued that the large sized land was commonly owned by old farmers who had no alternative source of income and therefore they had to opt for the itinerant personnel to get daily cash disbursements to cater for the daily expenses. However, recently young generation has gained interest in agribusiness from which they derive their livelihood and therefore the argument above may or may not hold. Furthermore the few old dairy farmers will have accumulated a lot with time and thus no need for daily cash, taking in to account of their low daily expenses compared to the young. The above researchers also argued that, the probability of farmers opting for dairy cooperatives increased if household head worked off farm. The farmers could get income which could cater for the daily expenses and therefore be patient for the monthly income from dairy cooperatives. On the other hand off farm commitments may reduce the time channeled towards milk production leading to reduced production, this may increase the chances of farmers opting for milk traders since they can handle their milk supply on top of better payments. As documented by LM Mburu et al (2007), Alene et al (2008) and Omiti J. et al (2009), permanent hired labour had a positive influence on milk marketing through dairy cooperatives channels permanent hired labour increased the efficiency of resource use due to high level of commitment which in turn increased production per unit. Excess milk could only be marketed through this sector. The above statement holds since in most cases permanent laborers receive monthly payments therefore it seems systematic to opt for dairy cooperatives since the monthly receipts can be used to settle for the monthly expenses. Daily cash receipts from itinerant personnel may not aggregate to settle the monthly expenses due to minor unplanned daily expenses. According to LM Mburu et al (2007), there is a negative relationship between the average milk prices and the marketing of milk through dairy cooperative channel. Unlike other channels which imposed milk delivery quotas during the time of milk glut, cooperatives did not but rather offered low prices, therefore farmers would opt for the latter due to assertainity of markets. It goes without saying that the higher the price offered by a sector the higher chances of adoption of the sector by the farmers. The probability of milk marketing through cooperatives increased with ease of credit availability (L. Mburu et al 2007). For farmers to access credit without security from the cooperatives they have to be members through supplying their milk to the sector. Increased credit availability increases investment in dairy sector which in turn will increase milk supply. The excess milk will be sold through the cooperative sector since it can handle large supply of milk. As identified above there exist some dis-harmony on some factors influence on the choice of dairy breeds by farmers, therefore to make it clear it calls for a research on the matter.

2.2 CONCEPTUAL FRAMEWORK Figure below presents a conceptual framework on the factors hypothesized to affect milk marketing. Social factors
Economic factors

Low prices

Default in milk payment
Increased cost of production

Reduced Milk Marketing

Source: Author’s conceptualization Social and economic factors are hypothesized as determinants of the reduced milk marketing. Increased cost of production may be one of the economic factors when taken from the point of view that, increase in the cost of production will act as a burden to the already existing farmers to maintain their milk production. Most of the records captured of milk marketed in an area forms the bulk of milk sold through formal channels. Default in payment as well as untimely payment of farmers may act as disincentives for further production and therefore contribute to reduce milk marketing. The overall aim of production is to earn profit; low prices offered to the farmers will reduce the profit and eventually reduce farmers’ incentive to produce.
3.0 METHODOLOGY This chapter outlines the methods and procedures that were used in the collection and analysis of data. It aims at identifying the social and economic factors which has contributed to reduced milk marketing in Nyeri East District. 3.1 Description of the area of study Nyeri East is located in Central Province about 150 kilometres north of Kenya’s capital Nairobi. It is at the periphery of Mt. Kenya forest which is a source of many rivers in the region as well as home for many wild animals. It has an area of approximately 269.60 square kilometres with a population density of 148,847 individuals and therefore can be regarded as densely populated (Kenya Bureau of Statistics, 2009). The region is located at an altitude of 1759 m above sea level. Nyeri receives moderate to high rainfall at an average of 500mm to 1500mm per annum. Temperatures range between 12 to 27 degrees Celsius and therefore the region is best suited for many agricultural activities. The rainfall pattern is bimodal, with long rains received between March and May, while the short rains are received between October and December. The region is located to the South of Mt. Kenya and the East of Aberedare ranges thus a home for tourists which is one of the main economic activity if the region. Due to presence of fertile agricultural soils agricultural potential in the area is very high with coffee and tea being the main cash crop and the chief source of income for the people. Despite the two crops, dairy farming has currently emerged as another source of livelihood in the region. This is practiced mainly by smallholder farmers although in the Northern part of Nyeri ranches has been established. Horticulture farming especially fruits and vegetables as wells maize farming constitute the minor activities of the region. The main mode of transport is by road and the region is connected to major towns like Nairobi, Nakuru as well Nanyuki. Karatina market located in the district is the largest open air market in East Africa and therefore offers marketing of different farm produce.
3.1.1 Selection of the study site a. The district is a good representation of Kenya’s high agricultural potential areas due to its high and well distributed rainfall patterns. b. The area is easily accessible for survey purposes.
3.2 Research design and sampling procedure The research took the form of experimental design as it involved data collection from different respondents which was analyzed and conclusions made thereafter. A representative of the population was selected by application of probability sampling in which cluster random sampling was used. Individuals were grouped according to location boundaries the bases from where 2 sub-locations from each 4 wards were selected. 2 villages were then randomly selected from each sub-location, out of which 2 households were selected. A sample size of 32 households was used. The selected households were smallholder farmer rearing at least one dairy cow. Individual rather than group interview was adapted to ensure maximum cooperation of the respondent therefore high quality of data was collected.

Map of Nyeri district Source: google.com 3.3 Data collection Data was collected in the month of February 2013. It involved the use of interview method which was conducted in each of the selected households. Semi-structured questionnaires were used to obtain information from the farmers. The questionnaires involved information on household characteristics, economic and social characteristics. National language was used and where appropriate local language was also applied. In case the selected respondent was not willing to participate in the study, another respondent in the locality was substituted.
3.4Data analysis

Data was entered in Microsoft excel. Data cleaning then took place where omissions contradictions and doubtful answers were rectified. By use of the above software the data was analyzed to get the mean, standard deviation as well as frequency distributions. The results were analyzed by use of descriptive statistics 4.0 RESULTS AND DISCUSSION 4.1 Descriptive statistics of sampled house holds 4.1.1 Household income and assets In the study area of interest the researcher found out that most farmers are rearing exotic breeds where most of them practice it under zero grazing while a few carry out the open grazing system. Under zero grazing system a farmer could rear more than three dairy cows in half an acre and be in a position to increase the herd provided they have enough feed supply. A relationship exist between the number of dairy cows owned by each farmer and the amount of milk sold. As shown in figure 1, milk produced per household increased as the size of herd increased. According to the Ministry of Agriculture, 2012, in its report it showed that as farmers increased their herds especially the high yielding dairy breeds milk supply increased.

Figure 1

4.1.2 Demographic factors
Age and gender were some of the demographic variables captured in the study research. My sample showed that 31 percent of the dairy cattle reared in the district are under management of women while their male counterparts control 69 percent of the sector. There was no clear relationship between gender and the average milk sales. On the other hand age was analyzed to show a negative relationship with the average milk sales as shown in figure 2. As the age of the farmer increased the average milk sold per cow declined. This may be true when viewed from the perspective that as farmers grew older they could get less concerned with profit motive and pursue other interests in their production. On the other hand this may not be necessarily the truth when taken in to consideration that old farmers are more experienced in their business than young farmers and therefore expected to record higher output.
Age as a factor affecting production has been analyzed by different researchers in different fields of production. Otieno D; 2012 in his research on farmers adoption of improved beef showed that as farmers age increased they were less willing to shift to improved breeds. This may be brought about by their non-dynamic nature which may be interconnected with this research to show that old farmers are less willing to adopt the high yielding dairy breeds and therefore record low milk production.

Figure 2

4.1.3 Effects of price on milk sold
Price is regarded as the compensation made to the farmers in return for their product supply. Taking in to consideration the producers motive of profit maximization the prices offered to the farmers will determine their ultimate future production in that good prices will motivate them to increase their production so as to earn more. Moreover producers has a cost minimizing motive which can be achieved through increased total revenue to cover up total costs
Figure 3 shows some kind of a relationship between average milk sold per cow and the selling price offered in the market. As price increases there is a tendency to sell more due to the created incentive of producing more. Mburu et al. 2007, in their research on the determinants of smallholder dairy farmers adoption of dairy marketing channel, came up with price as one of the chief determinants. Farmers will prefer a marketing channel where higher prices are offered. Figure 3

4.1.4 Effects of distance to market on milk sold A market represents the place where goods and services are exchanged. The convenience and accessibility of a market will determine the number of market participants. Easily accessible markets are mostly characterized by free entry and exit of the participants as well as many buyers and sellers. According to fig. 4 the distance covered by farmers to the milk market, determine the average milk they sell. The longer the distance the less the amount sold. This may be true considering that farmers are rational producers and will always take that opportunity which will not antagonize their motive of profit maximization. They will opt to sell their milk to the nearest market so as to minimize on their cost. The research further showed that most of the farmers whose milk is collected direct at the production site record the highest milk sales. According to Mburu et al. 2007 accessibility of a market is one of the determinants of farmers adoption of a particular milk marketing channel. Figure 4

4.1.5 Milk marketing channels There are four markets through which dairy farmers sell their milk in Nyeri East district among them; Brookside dairy, KCC, Hygienic dairy, hotels and individual consumers. Hygienic dairy commands the lowest share of the market as shown in figure 5. This is because the cooperative has just started and therefore has low popularity. On the other hand, Brookside commands the largest market share due to its prominence in the market. Figure 5 shows that formal marketing channel dominates the market with 55 percent share against informal marketing channel which controls 45 percent of the market.

Figure 5

4.2 ECONOMIC FACTORS AFFECTING MILK MARKETING 4.2.1 Non cost factors Several non-cost factors attributed to reduced milk supply in the market were identified. These factors are perceived by farmers as hindrances to their production capacity and therefore they directly affect the amount of milk marketed. Among the factors perceived to have lesser effect include; climate change, animal diseases, limited time as well as presence of sub-standard feeds in the market. Due to the current increased returns from other agricultural sectors especially tea farming in the area, most farmers are getting engaged in nurturing their tea farming business. In the process they are left with limited time to cherish and expand their dairy farming business consequently leading to reduced milk supply. In line with that is the problem of low quality feeds, where farmers claim that some of the feeds supplied through various agro vets are of sub-standard quality and cannot meet the dietary requirement of an animal. This is perceived to lower the yield of the animal and consequently lead to low milk supply in the market. Foot and mouth disease is another problem prevalent in the Northern part of the district. The disease is said to devastate a large number of animals in the district (Ministry of Agriculture, 2011). Death of animals will automatically lead to reduction in the amount of marketed milk. Limited land, limited capital and failure of milk acceptance were identified as the major non-cost factors that have affected greatly milk supply in the market as shown in figure 6. Most farmers own less than two acres of land which are considered to be inadequate for a single animal provided the standard rate of one cow per three acres of land (mburu, 2011). Farmers have been selling some of the animals to cut down on animal feeds requirements. Others remain with their original herd but cut down on the feed supply to the animal and therefore reducing milk production. Limited capital resource is another factor related to the problem above and which poses a challenge in dairy farming in that most farmers rely on purchased animal feeds. Farmers selling their milk through formal marketing channels among them, Brookside dairy and KCC experience a challenge of failure of their milk acceptance. This is due to the low quality of feed products brought about by the use of improperly made silage. This emanates from farmers lack of knowledge and skills in preparing silage and their unwillingness to pay for the service by experts. The farmers end up selling the milk locally to individuals and therefore the sales are not under the district’s sales records. Figure 6

4.2.2 Cost factors Cost minimization is one of the main objectives of producers. They strive to work best at the lowest cost possible, in the process increasing their profit. Different costs were identified which were perceived by the researcher to pose a great challenge in production process among them are; veterinary costs, labour cost and animal feeds costs as shown in figure 7. Labour and veterinary costs to some extent seem to be constant over long periods of time. Due to this they cannot be given a significant attribute as to affect the amount of milk marketed in the area of study. Therefore among the economic factors these costs are perceived as to contribute insignificantly to the amount of marketed milk. On the other hand, cost of animal feeds is recognized by the researcher as the main cost that is currently hindering farmers in advancing in dairy sector. The problem ranges between high costs of feed acquisition to feeds unavailability which is experienced over the years. Due to feed unavailability farmers opt selling some of their animals or reducing the feed ration per animal consequently leading to low yields. Currently the cost of dairy meals has been increasing at an increasing rate while the price of milk has been increasing at a decreasing rate therefore posing a challenge in the dairy sector.
Figure 7

4.3 SOCIAL FACTORS AFFECTING MILK MARKETING
In the Northern part of the district, animal theft is prominent and in some way do inconvenience farmers in their production process. This may have an effect on production especially if the animals are raided out of the district, but in case the animals just remain within the periphery of the district no effect will be felt on the ultimate milk supply, but will generate a negative effect on the affected farmers.
Another social factor addressed was the religion of the farmers and its effects on dairy farming. The research did not come up with a reason to relate religion to the reduced milk marketing problem.

5.0 CONCLUSION AND RECOMMEDATION
5.1 Conclusion
Agriculture is the backbone of Kenya’s economy and therefore there is need to address any challenge that may hinder the development of the sector. Narrowing down to the problem of the research, the aim of the study was to analyze the economic and social factors that have contributed to the reduced milk marketing in Nyeri east district. There is enough documentation to show that milk marketing in the above area has been gradually declining between the years 2009 and 2012.
The research was conducted successfully and some factors were identified which could be attributed to the cause of the problem at hand. The research found out that the problem of limited land resource was a major challenge that deterred dairy production. Since Nyeri is characterized by fertile soils and favorable environment for farming, the population density is high and therefore farmers own small piece of land which are potential to various agribusiness activities. This leads to small portions of land being allocated for dairy farming. This problem can be interconnected with the problem of limited animal feeds which comes about due to limited land. As a result of reduced animal feeds dairy production is abridged.
Apart from dairy industry, there are other income earning activities carried out in the area of study, among them tea and coffee farming. Due to the current increased returns from tea farming, most farmers are held up in the sector and in the process neglecting the dairy sector. This has eventually led to decline in milk production as well as marketing.
The research was also able to delineate failure of milk acceptance by milk buyers as another major problem which poses a challenge to farmers. Due to the problem of limited animal feeds farmers have turned to preparation of silage, the form of animal feeds which can be stored for years. Due to lack of essential skills and expertise the feed ends up rotting yet the farmers cannot forfeit it due to the high cost incurred. They end up producing low quality milk which rejected by the buyers. Other economic factors identified were age of the farmer and distance to the market which was concluded as to have minor effect on the amount of milk marketed compared to price which has a higher impact on the same.
Among the social factors, animal theft was identified as one of the problem facing dairy farming in the area. To achieve the potential production capacity these problems should be addressed by the relevant authority.
5.2 Recommendation
To address the above problems I wound recommend the government through the Ministry of Agriculture to conduct a research to find out whether animal feeds in agro vets are of the required standards. It should take the initiative of ensuring all animal feeds and concentrates are thoroughly inspected to ensure they meet the required standards.
With the devolved system of government the ministry of agriculture through the livestock department should take the initiative of addressing the problem of foot and mouth disease in the district and find possible undertakings to curb the problem in Kenya. The government should also be able to fight animal theft which is another major challenge.
The government should provide services to dairy farmers through extension officers and especially on issues concerning preparation of animal feeds as well as provide subsidized animal feed to ensure farmers’ increased incentives to production. Through this, dairy sector will be equivalent to other sectors in agriculture and farmers will fully devote themselves in milk production which is a major food source in Kenya.

6.0 APPENDICES

6.1 Questionnaire
Dear respondent,
I am Dickson Maina a student at the University of Nairobi. I am requesting you to provide me with information below which is meant for a research work which will culminate in partial fulfillment of the award of Bachelor of Science in Agriculture. The information will be handled with utmost confidentiality.

HOUSEHOLD CHARACTERISTICS
1. Name …………………………………………………………………………………
2. Gender Male (Tick where appropriate) Female
3. Which is your ward…………………………………………………….. Sub-location…………………………………………….
4. What is your current age …………………………. Years
5. What is the distance from the farm to the nearest milk market? ………………….. Km.

DAIRY PRODUCTION STRUCTURE
6. How many dairy cows do you have? …………………………… cows.
7. What is the average milk production per cow per day? ……………………….. Litres /cow/day.
8. How many litres of milk do you sell per day?
9. To whom do you sell your milk? ...........................................................................................................
10. What is the average selling price of milk per litre? ……………………..Ksh/litres.
11. Are you paid on time? Yes (Tick where appropriate) No
12. Do you experience default in payment? Yes (Tick where appropriate) No
13. If yes, does this affect in any way your production capacity?
……………………………………………………………………………
……………………………………………………………………………
14. What are the main costs that you incur in production?
…………………………………………………………………………….
…………………………………………………………………………….
……………………………………………………………………………..
……………………………………………………………………………..
15. Among the above named costs which one deters you to a large extent from increasing your production?
………………………………………………………………………………
………………………………………………………………………………
16. Other than cost which other challenges do you face in the production process?
…………………………………………………………………………………
………………………………………………………………………………….
………………………………………………………………………………….
17. Which is your religion? .......................................................................................
18. Does your religion affect in any way your dairy business? ………………………
…………………………………………………………………………………………

6.2 Results in tabulated form
Table 1

DISTANCE TOMARKET (KM) | NO. OF DAIRY COWS | MILK SOLD (LITRES) | AVERAGE MILK SOLD PER COW | TARGET MARKET | SELLING PRICE PER LITRE | PAID IN TIME | DEFAULT IN PAYMENT | 0.4 | 1 | 10 | 10 | Individuals & hotels | 29 | Yes | No | 0.4 | 4 | 6 | 1.5 | Brookside dairy | 28 | Yes | No | 0.1 | 4 | 4 | 1 | Brookside dairy | 28 | Yes | No | 0 | 2 | 4 | 2 | Brookside dairy | 28 | Yes | No | 0.5 | 1 | 4 | 4 | Brookside dairy | 28 | Yes | No | 0 | 8 | 10 | 1.3 | Brookside dairy | 28 | Yes | No | | 8 | 15 | 1.9 | Brookside dairy | 28 | Yes | No | 0.4 | 4 | 2 | 0.5 | Hygienic dairy | 30 | No | No | 0 | 4 | 3 | 0.8 | KCC | 30 | Yes | No | 0 | 2 | 2.5 | 1.3 | Individuals & Hotels | 32 | No | Yes | 0.3 | 3 | 3.5 | 1.2 | Brookside dairy | 28 | Yes | No | 2 | 3 | 7 | 2.3 | Brookside dairy | 28 | Yes | No | 0 | 1 | 3 | 3 | individuals & hotels | 27 | No | No | 0 | 7 | 5 | 0.7 | KCC | 30 | Yes | No | 0 | 2 | 1.5 | 0.8 | Individuals & hotels | 31 | Yes | No | 0.7 | 3 | 5 | 1.7 | Brookside dairy | 28 | Yes | No | 0.4 | 6 | 3.5 | 0.6 | Brookside dairy & individuals | 29.5 | Yes | No | 0.3 | 1 | 7 | 7 | KCC | 30 | No | No | 1.2 | 6 | 8 | 1.3 | Brookside dairy | 28 | Yes | No | 0.4 | 2 | 4.5 | 2.3 | Individuals & hotels | 31 | Yes | No | 1 | 2 | 3 | 1.5 | Individuals & hotels | 29 | Yes | No | 0.1 | 2 | 4 | 2 | Individuals & hotels | 30 | No | Yes | 0 | 3 | 6 | 2 | Hotels & Brookside dairy | 29 | Yes | No | 0.5 | 2 | 7 | 3.5 | Individuals & hotels | 31 | Yes | No | 0.1 | 2 | 6 | 3 | Brookside dairy | 28 | Yes | No | 0.1 | 2 | 3 | 1.5 | KCC & individuals | 30.5 | Yes | Yes | 0.5 | 3 | 4 | 1.3 | KCC | 30 | Yes | No | 0.1 | 3 | 4.5 | 1.5 | Brookside & hotels | 28 | Yes | No | 0 | 7 | 6 | 0.9 | Brookside & hotels | 29 | Yes | No | 0 | 4 | 4.5 | 1.1 | Brookside & individuals | 29 | No | No | 0.3 | 1 | 4.5 | 4.5 | Hygienic dairy | 30 | No | No | 0 | 2 | 15 | 7.5 | Individuals & hotels | 35 | Yes | No |

7.0 REFFERENCES

Omiti J. Otieno D. Nyanamba T. and Mc McCullough E; 2009. Factors influencing the intensity of market participation by smallholder farmers, Kenya institute for public policy research and analysis KIPPRA, Nairobi.
Otieno D; 2012. Market and non-market factors influencing farmers’ adoption of improved beef cattle in ASALS of Kenya, department of Agricultural Economics, UoN
Njarui D. Kabirizi J. Itaburi J. Gatheru M. Nakiganda A. and Mugerwa S; 2012. production characteristics and gender roles in dairy farming in peri-urban areas of east and central Africa, Machakos ,Kenya and Masaku, Uganda.
Mburu L. Wakhinga J. and Gitu K; 2007. Determinants of smallholder dairy farmers’ adoption of various milk marketing channels in Kenyan highlands, MoL and fisheries department, UoN department of animal production, UoN department of agricultural economics, Nairobi.
S. Wambugu and L. Karimi, 2010; Dairying in Kenya; An assessment of competitiveness and profitability in Githunguri, Kinangop, Trans-Nzoia and nyeri, Kenya.
Ministry of Agriculture, 2012; Annual agricultural report in Kenya.
Republic of Kenya, 2008; Economic survey; Kenya Bureau of Statistics, Ministry of Planning and National Development. Nairobi.
Government of Kenya (GoK) (2004); Strategy for revitalizing Agriculture. Ministry of Agriculture & Ministry of Livestock and Fisheries.