Vertical and Horizontal Integration as Determinants of Market Channel Choice among Smallholder Dairy Farmers in Lower Central Kenya
James K. Mutura
Stima Sacco Society Ltd and PhD (Agricultural Economics) Candidate, Department of Agribusiness Management and Trade Kenyatta University, Nairobi Kenya
Newton Nyairo
Department of Agribusiness Management and Trade Kenyatta University, Nairobi Kenya
Maina Mwangi
Department of Agricultural Science and Technology Kenyatta University, Nairobi, Kenya
Stephen K. Wambugu
Department of Agribusiness/Geography, Chuka University, Chuka, Kenya
Keywords: Multinomial logit, Marketing channels, Smallholder dairy farmers.
Abstract
This study sought to analyse vertical and horizontal integration as determinants of market channel among smallholder dairy farmers in Lower Central Kenya. Data was collected from 288 small holder dairy farmers in this region using multistage sampling technique. Processing and analysis of the survey data was carried out using SPSS version 20 and STATA version 12. Multinomial logit regression model (MNL) was used to analyse factors influencing the choice of dairy market outlet by the small holder dairy farmer. Level of education, milk output, access to information and transaction costs influenced the choice of marketing channel. Vertically integrated households used own outlet as marketing channel while horizontally integrated households used cooperative and farmers associations as milk marketing channel. It is recommended that programmes relating to milk market information be made accessible to farmers. There is need to profile farmers on the basis of production, spatial location and education level and encourage them to use specific marketing channel.