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Assessing the Cost of Production Structures in Kenya Dairy Systems Study

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Dairy is an important industry in Kenya contributing about 14% of the agriculture GDP and 4% of the National GDP. It supports more than one million smallholders and plays a critical role in food and nutrition security through milk consumption and increased household incomes. The sector is regarded as a success case in Kenya due to the following factors: First, the sector supports a large proportion of small holders since about 80% of milk is produced by smallholders. Secondly, it is commercially-oriented creating employment both in the formal and informal milk chains through linkages; and finally, it has potential for more growth both domestically and regionally due to the high milk consumption levels in Kenya and unmet demand in the region. Thus, the sub-sector has the potential of playing an important role in improving the livelihoods of small-scale farmers. However, realization of the sector’s potential has continuously been faced by many challenges as documented in several papers and reports. Some identified farm-level challenges include high cost of production, declining land sizes, consumer concerns about milk quality and safety, lack of good quality animal breeds, and poor husbandry and farming practices, among others. 

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