An economic analysis of dairy production systems in Nyamira District, Kenya

Abstract

This study was motivated by the need to find out whether farmers could increase their profits through intensification of input use. The major objective of the study was to characterize the dairy production systems in terms of management practices, i~put use and the costs and returns associated with each production system. The constraints faced by farmers in each production system were identified and means of easing them suggested. The data used in the study was collected from 150 farmers in three dairy production systems practised by farmers in Nyamira district. The data collected included the resources used in milk production, yields obtained, prices of inputs and output and the problems faced by farmers in dairy production. Gross margin analysis was done for each system of production and the means compared. The results indicated that the gross margins. for the three systems of dairy production is currently not significantly different from each other. Quadratic and Cobb-Douglas functions were fitted using the inputs used in dairy production and marginal products equated to inverse price ratios. The results showed that the highest scope of increasing milk yield and profit exists in zero grazing where it is possible to increase milk yield by 94.4% (2538.6 kg/cow above current levels) through increased use of concentrates and farm by-products. For semizero and extensive grazing systems, farmers could increase milk yield by 57.5% (from 2517.9 to 3964.8kg/cow/year') to reach economic optimum by using more concentrates and forages. The important conclusion which can be drawn from this study is that there is unexploited potential in the three dairy production systems, The study r~~oml1lends that farmers should be encouraged to use more concentrates by addressing problems which lead to limited use of concentrates by farmers. These would include efforts such as: Paying farmers promptly for their milk so tha tthey have sufficient cash to buy concentrates, making roads more passable especially during the rainy season for easy transportation of feeds, and assisting farmers to ""'-' acquire concentrates on credit and later deduct the cost of the concentrate from the proceeds from the sale of milk. _ Farmers in Rigoma division should be assisted to form a cooperative society to alleviate the problem of milk marketing since they cited lack of organised market for milk as a common problem. Rural access should be improved to facilitate easy marketing of milk delivery of feeds and artificial insemination services.