Abstract

M. M. Kavoi, Dana L. Hoag and James Pritchett

Exotic dairy cattle have been adopted in the transitional zone IV of Kenya contrary to the opinion of experts who previously hypothesized that the "drier transitional zones" could not meet the requirements of the high performing exotic breeds. However, the economic efficiency of these breeds and the factors influencing them have not been ascertained and growers in the region are using these breeds. This study surveyed smallholder dairy farmers in the transitional zones of Machakos and Makueni Districts, and used a stochastic frontier translog cost function approach to determine their efficiency. The findings show that cost inefficiency ranges from 0.01 - 81.11, with a mean of 27.45%. Exotic dairy breeds are the most efficient in the transitional zones. Ayrshire achieved the lowest cost inefficiency (24.36%), followed by Friesians (25.08%) and Jersey (25.54%). Sahiwal (28.43%) has the lowest cost inefficiency among the indigenous breeds. The cooperative societies in the transitional zone IV were more efficient than those in the Upper Midland (UM) zone. Road infrastructure, extension and credit significantly reduce cost inefficiency. Keeping dairy records and primary level eight education are the key characteristics influencing efficiency. Policy and decision makers can use these institutional and socio-economic findings to inform education and policy aimed at improving efficiency of dairy production in the transitional zone IV in the medium potential regions.