Financing Agricultural Value Chain in Kenya: Challenges and Opportunities in the Dairy Subsector

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dc.contributor.author Kariuki, Cecilia
dc.date.accessioned 2016-09-28T12:16:59Z
dc.date.available 2016-09-28T12:16:59Z
dc.date.issued 2016
dc.identifier.uri http://erepo.usiu.ac.ke/11732/2738
dc.description A Project Report submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Organizational Development (EMOD) en_US
dc.description.abstract The role of value chain financing in the development field and especially, in the agriculture sector in agriculture is well established. Attempts to foster financial systems in the Kenyan dairy subsector have been advocated by officials concerned with the value chain financing. The purpose of this study was to investigate the financing agricultural value chain in Kenya where the focus was on challenges and opportunities in the dairy subsector. It explored value chain financing gaps in Nakuru, with a focus on the dairy value chain. The research design was descriptive in nature focusing on dairy farmers in Nakuru. the target population of this study comprised of 3094 respondents who were the dairy farmers spread across the four districts in the County including Nakuru, Nakuru North, Naivasha and Molo. Nakuru was chosen for the study because of the large number of actors involved, especially at the level of producers and traders. Information was collected using a questionnaires developed by the researcher. Data was analyzed using Statistical Package for Social Sciences version 12.0 (SPSS), Ms Excel 2003/2007. Descriptive statistics were used such as mean and inferential statistics to analyze the data. Multiple regression models were used to analyze the data too. Moreover, a t-test for statistical significance level of 0.5 was used. Regression was as a statistical technique used to examine the way a number of independent variables relate to one dependent variable. This procedure attempted to predict a single dependent variable from any number of independent variables entered into regression equations. The study found that the main financial services provided to dairy farmers in the county of Nakuru are loans, banking and insurance services. From the study, it is evident that most dairy farmers are not satisfied with the services rendered mainly due high cost of interests on credit and cost of inputs required in production. The study further found that lack of positive relationship between access to financial services and reason for venturing in dairy sector could be extended to mean that most respondents did not fully see dairy farming as purely commercial enterprise and as such had not maximized returns on the venture. It was also evident from the data that high interest rates on credit remain a big barrier to access to finances by dairy farmers The study further found that there are various constraints facing the dairy value chain financing among dairy farmers in Nakuru in Kenya which include high interest rates, lack of collateral/loan security and information about credit products. The government has not put in place laws to regulate prices of dairy products and costs of inputs leading to a lot of difficulties on the part of the farmers. To address this gap, the government and financial services providers should find ways of reducing interest on available credit products and the choice of financing among dairy farmers in Kenya as being both institutional factors being cost of credit, flexibility of loan repayment, collateral demands, application procedures, proximity to lending institutions and size of loan available and personal factors being age, gender, experience in business and level of education. The financial institutions should take cognizance of this fact be encouraged in policy and in practice in order to improve the lot of dairy sector entrepreneurs participation in their programs. A policy to give incentives to financial services providers giving cheap credit to farmers ought to be considered. With increasing unemployment in other sectors, agriculture and in particular dairy farming is an alternative source of employment. It should therefore facilitate the growth of this sector by putting in place policies that favor low interest borrowing, affordability of inputs among others. en_US
dc.publisher United States International University - Africa en_US
dc.subject Agricultural Value Chain en_US
dc.subject Dairy Subsector en_US
dc.title Financing Agricultural Value Chain in Kenya: Challenges and Opportunities in the Dairy Subsector en_US
dc.type Thesis en_US

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