Will Small-Scale Dairy Producers in Kenya Disappear Due to Economies of Scale in Production?

There is growing policy concern regarding the competitiveness of small-scale livestock production in the wake of the contemporary livestock revolution in many developing countries. In Kenya, this debate has focused on economies of scale and the undue influence of policy distortions on promoting the scaling up of dairy farms. This paper seeks to investigate economies of scale in Kenyan dairy in terms of relative profit efficiency at different levels of output, and identify policy and technology options to help small-scale farmers develop solutions to the challenges of competition. Data were collected from 204 dairy producers of different farm sizes in rural Kiambu and Thika, and urban Nairobi districts and a stochastic frontier model approach was used to analyze the determinants of profitability and inefficiency. Unit profitability per farm ranged between US$0.13 - US$0.16 per liter of milk with no significant variation across scales of farm. However, at all given levels of scale of farm, inefficiency significantly contributed to variability in profitability across farms. Scale had no significant effect on efficiency, confirming the relative competitiveness of small-scale dairy producers. Dairy farmers with commercial poultry achieved higher relative profit efficiency as poultry waste was fed to cattle. Rural location relative to Nairobi also increased efficiency. Linking rural areas and major market centre with good roads, strengthening of farmers' co-operative societies and exploring use of cheaper raw materials in the manufacture of concentrate feeds may strengthen the competitive position small dairy farms versus large ones.Dairy Production, Stochastic Production Frontier, Efficiency, Profitability, Livestock Production/Industries, C21, Q12,

Agroindustrialization through institutional innovation

Some small-holders are able to generate reliable and substantial income flows through small-scale dairy production for the local market; for others, a set of unique transactions costs hinders participation. Cooperative selling institutions are potential catalysts for mitigating these costs, stimulating entry into the market, and precipitating growth in rural communities. Trends in cooperative organization in East-African dairy are evaluated. Empirical work focuses on alternative techniques for effecting participation among a representative sample of peri-urban milk producers in the Ethiopian highlands. The techniques considered are a modern production practice (cross-bred cow use), a traditional production practice (indigenous-cow use), three intellectual-capital-forming variables (experience, education, extension), and the provision of infrastructure (as measured by time to transport milk to market). A Tobit analysis of marketable surplus generates precise estimates of non-participants' ‘distances' to market and their reservation levels of the covariates—measures of the inputs necessary to sustain and enhance the market. Policy implications focus on the availability of cross-bred stock and the level of market infrastructure, both of which have marked effects on participation, the velocity of transactions in the local community and, inevitably, the social returns to agroindustrialization.Dairy farming Ethiopia. ,Collective farms Ethiopia. ,

SPATIAL ANALYSIS OF SOIL FERTILITY MANAGEMENT USING INTEGRATED HOUSEHOLD AND GIS DATA FROM SMALLHOLDER KENYAN FARMS

Although soil fertility is recognized as a primary constraint to agricultural production in developing countries, use of fertilizer in Sub-Saharan Africa is declining. Smallholder farmers still rely heavily on livestock manure for soil fertility management. To explore the determinants of soil fertility management practices, including both the use of cattle manure and inorganic fertilizer, data are used from a sample of 3,330 geo-referenced farm households across Central and Western Kenya. A bivariate probit model is applied to jointly examine the use of the two technologies. Particular attention is given to measures of location related to market access and agroclimate, which in the adoption literature have typically been addressed using crude proxies. To avoid such proxies, GIS-derived variables are integrated into the household decision model. Their use also allows the spatial prediction of uptake based on parameter estimates. The results show clearly the derived-demand nature of soil fertility services, based on markets for farm outputs. They also illustrate that supply of manure for soil fertility amendments is conditioned by demand for livestock products, especially milk. The integration of GIS-derived variables is shown to better estimate the effects of location than the usual measures employed, and offers scope to wider use in technology adoption research.spatial analysis, soil fertility, market access, technology adoption., Farm Management, Land Economics/Use, Q12, Q16,

Smallholder dairying under transactions costs in East Africa

In peri-urban areas of the world where cattle are present, dairy farming has typically been part of the adjustment in production patterns of smallholders faced with shrinking arable land, higher population density and rising wage rates. In sub-Saharan Africa, where the economic viability of smallholder agriculture has come under increasing pressure, smallholder peri-urban dairy development has not been widespread outside of the East African highlands. Understanding the nature of constraints limiting smallholder peri-urban dairying so as to promote this activity and improve the livelihoods of smallholders is, therefore, a key public policy issue for African countries. It is argued that dairying is vital to future viability of many small farms in East Africa and that high transactions costs for dairy production and marketing limit participation by asset- and information-poor smallholders. Case studies from Kenya and Ethiopia illustrate the role of dairy cooperatives in reducing transactions costs. Analysis of the determinants of producer prices received by a sample of dairy producers near Addis Ababa suggests that different levels of access to infrastructure, assets, and information explain why they contemporaneously accept widely different producer prices for fluid milk

Constraints to the sustainability of a ‘systematised’ approach to livestock marketing amongst smallholder cattle producers in South Africa

Commercialization of smallholder agriculture in South Africa is underpinned by reforms to improve livestock off-take in communal areas and engage smallholder farmers with formal markets. To achieve this, Custom Feeding Programmes (CFPs) were established to improve the condition of communal cattle prior to their sale into formal markets and to ‘systematise’ the informal marketing of cattle in communal areas by enabling participants to achieve higher informal market prices. We evaluate the sustainability of eight CFPs located in Eastern Cape Province in terms of their ability to add value to smallholder cattle production and encourage market participation. Communities with CFPs achieved a 16.6% mean cattle off-take rate, substantially higher than in most communal systems. Furthermore, cattle sold through CFPs attained a 17% higher mean selling price than those sold through other marketing channels. However, these benefits were mainly realized by better-off farmers with larger cattle herds and greater ability to transport animals to and from CFPs. More marginalized farmers, particularly women, had low participation. CFPs also face challenges to their sustainability, including inconsistent feed and water supplies, poor infrastructure and high staff turnover. Key to enhancing participation in CFPs, will be improving the way they are supported and embedded within communities

The role of market outlet in determining terms for milk sales by smallholders in Kenya

Dairy production is a key small farm strategy for generating income in the Nairobi milk shed. The high perishability of milk under Kenyan conditions appears to be associated with a high frequency of small individual transactions, the terms of which are subject to forced “fire” sales, delayed payments or default. Reliability of outlets in the wet (milk glut) season is also a consideration, and credit sales typically are matched with a commitment to be a steady customer. Two salient phenomena are observed: reported unit milk prices differ widely within the same location and time period, and spot sales for cash tend to be at a higher unit price than sales on monthly credit. We hypothesize that dairy farmers in the Nairobi milk shed choose market outlets and levels of cash sales that reduce transactions costs and help assure reliable future outlets, at the expense of current income. A decomposition of producer milk prices across time, space, and market outlet suggests that reliability of outlet is worth up to 17 % of the spot price, in addition to waiting a month to be paid. Risks of credit default are illustrated by predicted weekly credit prices that are 5 % lower than monthly credit prices. Data from 21 smallholder farms monitored daily over one year are used to estimate a two-limit Tobit model of the role of the characteristics of market outlets and producers in explaining the share of producer output sold for cash rather than credit. Younger, more educated producers, receiving a regular off-farm salary, and near market centres are shown to be more likely to accept sales on credit. Older producers with more experience but less formal education are more likely to sell for cash rather than credit. The power of the model to explain different prices for milk in the same location and week suggests that such price differences viewed unidimensionally are not evidence of lack of market integration as conventionally defined, but an outcome of differential transactions costs and perceptions of risk by different producers

Spatial aspects of producer milk price formation in Kenya: a joint household-GIS approach

Smallholder dairy production is a widespread and growing activity in the Kenyan highlands, and a potentially important source of livelihood for many poor farmers with road access to urban areas of East and Southern Africa. Yet both market participation and net prices received vary widely across households. It is hypothesized that transport difficulties over poor roads directly affect farmer ability and willingness to participate in this market for a highly perishable commodity, even where asset and information levels would otherwise permit such participation. Furthermore, otherwise identical milk sales in a given market can yield very different farm-gate milk prices across farms, for the same reason, depending on the location of the farm. A Heckman iterative selection model is fitted to explain market participation and milk prices received across households for 712 observations on marketing (or non-marketing) of milk by Kenyan smallholders in the greater Nairobi milkshed. GIS-derived variables for distance and transport costs are combined with survey-derived variables for household characteristics to model market participation and the formation of farm-level milk prices. Parameters are used to specify milk price distance decay functions. The results differentiate the effects of roads by type and distance, and highlight the importance of milk production density and market infrastructure. Policy implications are discussed

Ordovician volcanic and hypabyssal rocks in the central and southern Miramichi Highlands: their tectonic setting and relationship to contemporary volcanic rocks in northern New Brunswick

New analyses of mafic igneous rocks from the central Miramichi Highlands have led us to modify the interpretation of its tectonic setting. New samples have been obtained from the Bam ford Brook and Trousers Lake areas of New Brunswick, and the Danforth area in Maine. All subalkalic mafic rocks, including the Trousers Lake striped amphibolites, are associated with a thick sequence of metasedimentary rocks and all are continental tholeiites, analogous to tholeiitic suites in the Tetagouche Group of the northern Miramichi Highlands. The presence of alkalic basalt and comendite in this area supports this correlation. In the southern Miramichi Highlands of Maine, silicic and intermediate volcanic rocks form part of the Woodstock-Meductic arc-related volcanic suite. RÉSUMÉ De nouvelles analyses de roches ignées mafiques provenant du centre des hautes-terres de la Miramichi nous ont conduit à modifier l’interprétation de leur environnement tectonique. De nouveaux échantillons ont été recueillis dans les régions du ruisseau Bamford et du lac Trousers au Nouveau-Brunswick, et dans la région de Danforth au Maine. Toutes les roches mafiques subalcalines, incluant les amphibolites rubannées du lac Trousers, sont associées avec une séquence épaisse de roches métasédimentaires et sont toutes des tholéiites continentales, similaires aux suites tholéiitiques appartenant au Groupe de Tétagouche du nord des hautes-terres de la Miramichi. La présence de basaltes alcalins et de comendites dans cette région appuie cette corrélation. Dans le sud des hautes-terres de la Miramichi au Maine, les volcanites siliceuses et inlermddiaires constituent une partie de la suite volcanique d'arc de Woodstock-Meductic. [Traduit par le journal

Nutrient flows and balances in intensive crop-dairy production systems in the Kenya highlands

Sustainability of their agricultural systems is essential for many tropical countries where the majority of the people depend upon agriculture for their livelihoods. In the short term economic sustainability is the main factor influencing viability of an agricultural system and of the farms which form its production units. In the long-term, however, economic viability will depend upon the nutrient status of a system. In common with much of the eastern African highlands, Kiambu district in central Kenya has high and increasing pressure on its land and farmers are responding by steadily intensifying their farming systems. This paper addresses the hypothesis that where ruminant livestock are present in intensifying smallholder cropping systems, they make a positive contribution to the nutrient status of the smallholder system. For 21 crop-dairy farms representative of the major smallholder-farming systems in the central highlands of Kenya, annual nutrient balances were determined in a longitudinal study. The farms were visited twice a week; data on all farm inputs and outputs were collected, based on farmer recall. Measures of livestock feed inputs were collected fortnightly. Estimates of nutrient gains and losses in the soil resulting from erosion, leaching, denitrification, volatilisation and N fixation were taken from the literature. Using these data, annual nutrient balances per hectare were estimated for N, P and K. The majority of the sample farms had balanced nutrient flows or were in positive balance for N, P and K overall because of positive flows to the dairy sub-unit, which counterbalanced the outflows from the crop sub-unit. The dairy unit contributed significantly, principally through feed purchases, particularly concentrates for lactating cows. Napier grass and crop residues were also purchased, and large quantities of roadside grass were collected from outside the farms. On the majority of the farms the nutrients returned to the cropping land as manure (which consisted of faeces, bedding material and feed refusals) contributed more nutrients than inorganic fertilisers. It is concluded that the dairy cattle played a major role in contributing nutrient in-flows into these intensive smallholder farms, as well as providing the household’s regular source of income through milk sales