Economics evaluation of relative profitability in small hold dairy farms in western Kenya

Abstract

The development and implementation of farm policies requires the general understanding of the farmers’ response to the availed technology. Where farmers have similar resource endowment, generalization of policies would help improve their production levels. The farmers profit levels were used in comparing their relative efficiency in dairy farming in western province Kenya where a bilateral donor agency had come up with strategies to improve dairy farming and increase farm incomes. Using field data obtained from farmers who were beneficiary of the donor-aided project and the general dairy farmer, normalized profit function was used to generate the parameters that were used in the evaluation of the farmers’ efficiency status. The results showed that although there are constraints in the production of milk, there exists an equal economic efficiency amongst farmers in the study districts. This would imply that policies can be generalized for the entire province but the existence of unique production constraints that are specific to each district would hinder this equality can be attributed to the utilization of similar technological packages provided by the donor agency.