A Descriptive study on demand for raw milk payment systems (evidence from Kenya)

Partial fulfillment for award of Master of Business AdministrationThe main objectives of the study were to evaluate factors that have contributed to the adoption of unit weight as the current milk pricing and payment system in Kenya; and identity the challenges to the adoption of a pricing and payment system based on quality. I n quality based system, Multiple Component Pricing Policy is used by estimating 'the values of the three main milk components (fat, protein and lactose) as positive factors and bacteria and other contaminants as negative factors. Descriptive survey was adopted and semi - structured questionnaires were developed and administered by the researcher to sampled respondents. The population of interest consisted of milk processors who processed raw milk into three or more products from raw milk. The study was a survey of five companies that manufacture butter, ghee, cheese and whole milk powder in Kenya, out of which 4 responded. Data was analyzed using descriptive statistics such as frequencies, percentages, mean scores and standard deviation. The study revealed that local and export demands for milk and most dairy products were growing fast against slow growth in supply. The study also revealed that the government played an important role in price and regulatory policy formulation. Some of the challenges identified by processors in adopting quality based payment system were; volume of milk supplied, large number of small scale farmers, little awareness, poor infrastructure in the rural areas, logistics, technology and low instal1ed production capacity for manufacture of value added dairy products. The main benefits of the current weight based system were reported as; simplicity and ease of use, low cost, transparency and acceptability by farmers