Measurement of economic efficiency for smallholder dairy cattle in the marginal zones of Kenya

Abstract

Exotic dairy cattle have been adopted in the transitional zone IV of Kenya contrary to the opinion of experts who 
previously hypothesized that the "drier transitional zones" could not meet the requirements of the high performing 
exotic breeds. However, the economic efficiency of these breeds and the factors influencing them have not been 
ascertained and growers in the region are using these breeds. This study surveyed smallholder dairy farmers in the 
transitional zones of Machakos and Makueni Districts, and used a stochastic frontier translog cost function 
approach to determine their efficiency. The findings show that cost inefficiency ranges from 0.01 - 81.11, with a 
mean of 27.45%. Exotic dairy breeds are the most efficient in the transitional zones. Ayrshire achieved the lowest 
cost inefficiency (24.36%), followed by Friesians (25.08%) and Jersey (25.54%). Sahiwal (28.43%) has the lowest cost 
inefficiency among the indigenous breeds. The cooperative societies in the transitional zone IV were more efficient 
than those in the Upper Midland (UM) zone. Road infrastructure, extension and credit significantly reduce cost 
inefficiency. Keeping dairy records and primary level eight education are the key characteristics influencing 
efficiency. Policy and decision makers can use these institutional and socio-economic findings to inform education 
and policy aimed at improving efficiency of dairy production in the transitional zone IV in the medium potential 
regions.