THE SOCIO-ECONOMIC FACTORS IN MILK PRODUCTION AND THEIR CONTRIBUTION TO TRANSACTION COSTS IN MILK MARKETING IN KENYA’S NORTH RIFT

The study aimed at assessing marketing constraints faced by small-scale dairy farmers in Nandi North and Uasin Gishu districts. This paper examines the socio-economic factors that depress milk production in the two districts. A combination of multi-stage, simple random and systematic random sampling methods was used to select the district and small scale dairy farmers, where 270 respondents were interviewed using structured questionnaires and interview guides. The results indicated that a good education, more dairying experience, proximity to a cooler/milk collection centre, and ownership of a means of transport reduced transaction costs, enabling farmers to sell milk in more formal channels. Further, good roads, residing in Uasin Gishu rather than Nandi North, owning a bank account, cooperating with large-scale farmers, using a phone in dairying and access to electricity by a household were also associated with selling milk in more formal channels. Ordinary Least – Squares regression showed that the socio-economic factors that reduced milk production were poor animal breeds, lack of feed supplementation, and poor health care of the animals. It is recommended that due consideration be given to the development of a better physical and institutional infrastructure which would effectively link these producer areas to markets and improve market knowledge by providing relevant market information and farming skills. The study gives guidelines to serve as a point of reference for further research in the dairy industry in general, and any milk marketing in a particular.