Impact of cooperatives on smallholder dairy farmers' income in Kenya

Apart from generating Gross Domestic Product (GDP), the dairy industry in Kenya contributes to the employment of over a million people along the milk value chain. The sub-sector, however, still experiences low productivity and extensive informal marketing. Farmers have, therefore, formed cooperative societies that have received support in cooling plants and access to dairy services, animal health and artificial insemination. However, participation by members of these cooperative societies is still low, and participation's impact on income has not been determined. This study sought to assess the impact of the choice of cooperatives on smallholder dairy farmers' incomes. Data was collected using a semi-structured questionnaire from a sample of 277 Nyamira and Homa Bay Counties farmers. An endogenous switching regression model was used to analyze data. The results indicated that cooperative market participation increased farmers' incomes by about 10%. The results also revealed that distance to market, milk payment period, number of lactating cows, farm size, and farmer location influenced farmers' decision to participate in the cooperatives. Furthermore, the level of education, number of lactating cows, farm size, access to off-farm income and access to extension services were significant in determining farmers' income. This paper suggests policies that increase cooperative market participation for smallholder dairy farmers in Kenya.