WP43-Productivity-Trends-and-Performance-of-Dairy-Farming-in-Kenya

Summaries
Gross margin rate (%) 15 30 22
Gross margin/variable expenses (Ksh) 0.2 0.4 0.3
Gross margin/concentrates cost (Ksh) 0.6 1.9 1.0
Average milk produced per cow per
month (litres) 436 393 411
Variable cost of production per litre of
milk (Ksh) 12 9 10
Gross margin per litre of milk (Ksh) 2 4 3
Average milk selling price (Ksh) 21 21 21
Concentrate cost/litre of milk (Ksh) 3.7 2.1 2.9
Gross margin analysis for dairy enterprises under both zero- and non-zero grazing systems, and
categorized by milk sheds is as shown in Table 4.12. For the zero-grazing system, the value of
milk produced per lactating cow per month was highest in Githunguri, followed by Trans-Nzoia
and Kinangop and lowest in Nyeri. Similarly, monthly productivity per lactating cow was
highest in Githunguri and lowest in Nyeri. The higher value of milk and productivity in
Githunguri can be attributed to membership in the successful Githunguri Dairy Farmers
Cooperative Society and Processor. The dairy farmers are vertically integrated into the
Cooperative society. Milk collection, processing and marketing is the core activity for
Githunguri Society but it also provides other services such as input supply stores (mainly feed)
and A.I. services for its members. Services to members are not only reasonably priced, but are
also offered on a credit basis. The members also obtain additional benefits from the Cooperative
society such as the ability to obtain foodstuffs like maize flour on credit from the society’s
stores.
The findings further indicate that across the milk sheds, purchase of concentrates forms the
largest share of the variable expenses except in Trans Nzoia. The cost of repairs and maintenance
is highest in Trans Nzoia and substantial in other areas, but very low in Githunguri. The total
variable costs were lowest in Githunguri, which translated to the highest gross margin per month
per lactating cow (Ksh.5, 406), which was up to 12 times higher than in other areas. Although
the variable costs in Trans Nzoia were higher than those in Kinangop and Nyeri, the former had a
much higher gross margin. This may be attributed to higher milk productivity and price.
The gross margin in Nyeri was negative, indicating that the revenues received from milk were
not sufficient to cover all the variable costs incurred. This could be as a result of the low milk
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