INFLUENCE OF INSTITUTIONAL AND SOCIO-ECONOMIC FACTORS ON THE SUPPLY RESPONSE OF SMALLHOLDER DAIRY FARMS IN THE MARGINAL ZONES OF KENYA

Kenya's stated policy is to increase dairy production through sustained liberalization of output and input markets. The present study assessed dairy farmers' responsiveness to both market price factors and non-price factors within a liberalized market environment. Econometric analysis used in the study is based on a profit function using farm household survey data collected for a year. Results showed that dairy farmers are more responsive to non-price factors than to price factors. Hence the need for a consistent and a sustained liberalization program in the sub-sector, as well as reinforcing liberalization policies in place by increasing public expenditure on rural infrastructure and other agricultural support services. Copyright (c) 2010 John Wiley & Sons, Ltd.