Asian Journal of Economics and Empirical Research

The study examined the impact of milk marketing channel choice decisions on dairy farmer household income, employment and breed technologies among dairy farmer households in Kericho County. Data was collected from 432 dairy farmer households using multistage cluster sampling technique. Both primary and secondary data were used in the analysis. Processing and analysis of survey data was carried out using STATA version 12. Multivariate probit and propensity score matching was used in data analyse. Propensity score matching was also used to account for selection bias. Matching results show that the average effect of the farmer household that sold milk to commercial buyers had higher probability of obtaining Kenya shillings 16.00 per day as compared to households that did not sell milk to commercial buyer. While selling through commercial milk buyers had significant positive effect on farmer welfare, majority of dairy farmers were hesitant to engage with them. Milk buyers value security in supply which comes from trusted relationships and contracts. Establishing such relationships is in the long-term interest of the dairy farmer. Therefore, to improve farmer welfare, group formation and partnership development should be strengthened, milk cooperative societies needs to be bolstered and an increased financial investment in livestock markets by national and county governments.