Abstract:
To improve pastoralists’ livelihoods, Sahiwal cattle breed, resilient and dual purpose in nature with the benefits of both improved milk and beef production and better adapted to harsh conditions in Arid and Semi-Arid Lands (ASALs) were introduced by Kenya Agricultural Research Institute (KARI) now Kenya Agricultural and Livestock Research Organization (KALRO). With potential expected increase in milk production, the market profiles are likely to change, yet the underlying factors driving this change are unclear. Using data from a random sample of 320 pastoralist households and 64 milk traders from Narok and Kajiado Counties, this study analyzed factors that influence milk market development in pastoral areas using Structure conduct and performance market analysis model (SCP); Multinomial logit (MNL) model; Double hurdle (DH) model; and Hedonic price model (HP) data were analyzed in order to provide information on possible effects on the output market changes contingent on increased production as a result of increase in number of Sahiwal cattle breed for milk market development. Gini coefficient, Lorenz curve and concentration ratios from SCP show that middlemen and processors dominated in the milk market. The DH results indicated that Sahiwal cattle, increased income and membership to groups increased participation while long distances to markets reduced participation. The MNL results showed that most pastoralists sold their milk to the middlemen and choice of other marketing channels was significantly influenced by total income, distance to the point of sale and group membership. The HP results showed that increased transaction cost reduced the price that the farmers received. Improving physical and market infrastructure, promoting high value marketing points is an intervention that is likely to make the market competitive. Ability to meet transaction costs associated with marketing and increased social capital through group membership is necessary. Reducing transactions cost and ensuring information symmetry by improving social networking among the farmers could improve milk prices.
