An investigation into dairy value chain financing in Kenya
Date
2012
Authors
Maina, Regina Wanjiru
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Dairy products contribute 30% of livestock GDP in Kenya and more than 22 % of
livestock gross marketed products. There are many players in the dairy sector: those
offering services and inputs; industry facilitators and development partners; and the
users of services/inputs and the smallholder dairy farmers dominate the industry at the
production level. This study was conducted in the month of January and February 2012
to examine the dairy value chain financing in Kenya.
The objectives of the study were to determine the status of financing in the dairy sector
in Kenya today, establish the various options/models of dairy value chain financing,
determine how effective the current financing mechanisms are and find out if the
current policies are adequate for dairy value chain financing in Kenya.
The research design was exploratory and the study employed the survey method and
non-probability convenience sampling method to sample the target population. The
primary data was collected through the administration of questionnaires.
Appointments were set up through phone calls and later personal visits made on the
appointment date to interview the respondents. The questionnaires were also sent out
via email to the respondents who filled them out and where there was need, telephone
call follow-ups were done. This was important as it covered a population that was
highly targeted and affordable. The study targeted and sampled 72 stakeholders in the
dairy sector in Kenya. The sample area was Nairobi and its environs.
The key finding of the study was that financing in the dairy sector in Kenya today (in
Nairobi metropolis) is through the banks and the MFIs. Various options/models of
dairy value chain financing are available but the facilitation model was the most
familiar and the warehouse receipt i.e. milk delivery receipts was asserted as the most important financial instrument. The current policies are adequate but the respondents
affirm that the government still needs to empower the diary sector in Kenya.
A key recommendation to the government and the stakeholders in the dairy sector is to
formulate favorable policies that can improve the dairy sector. There is need to have a
reduction in prices of farm inputs and suppliers. A vital recommendation to the media
houses is to propagate educative material in different dialects on value chain and the
models available. This report presents the findings of the research.
Description
A Dissertation submitted in Partial Fulfillment of the Master of Business Administration
Keywords
Value Chain, Dairy, GDP, Small-scale farmers, Financing, Kenya