Motivating factors for dairy cooperative membership in Kenya : a case of small holder dairy farmers in Kiambu County

A Dissertation Submitted in Partial Fulfillment of Master of Business AdministrationDairy cooperatives dominate the marketing of milk in Kenya on behalf of their members who are mainly small – scale farmers. These cooperatives serve farmers by collecting milk from them, bulking it and then distributing it as raw or pasteurized to various places or as dairy products such as yoghurt, ghee, butter and cheese. But despite the significance of membership to farmers, some farmers are still reluctant to join the cooperatives. The purpose of this study was to determine the factors that motivate and contribute to membership in dairy cooperatives in Kenya. The study employed a descriptive research design. The target population included all the 59,635 dairy farmers registered as members of the seven cooperatives societies in Kiambu County. The study adopted a stratified random sampling method to arrive at a representative sample of 398 respondents. The study collected primary data using a questionnaire which was analyzed using descriptive statistics and regression analysis. The study found that there was a strong relationship between the three factors and cooperative membership but market access had the highest influence on the decision to membership. The second was social factors, while the third was economic factors. From the findings, the study recommends that managers of cooperatives must have clear policy on fund management. This policy should indicate transparency and accountability of members’ funds. The second recommendation was that the dairy cooperatives must always have unallocated equity capital. They should invest the funds well so as to reap good returns for the benefit of the farmers. This will help to retain the farmers who are members as well as attract more members. They should always ensure that whatever obligations they have are met as and when they ought to without disrupting with the farmers’ borrowings. Thirdly, the study recommends that managers of dairy cooperatives must involve farmers when making marketing decisions especially concerning prices, products, market and promotion. As organizational stakeholders, their involvement is vital in determining the ability of the dairy to achieve its goals. The fourth recommendation was that management of a dairy cooperative must position collection points in the most proximate location to the farmers in order to get as many members as possible. The fifth recommendation is that the dairy cooperative must be able to add value to the milk to enable them access wider markets and maximize returns to members. The study finally recommends that private processors should give more benefits than the cooperatives give to the farmers so as to attract them to supply milk to them. The milk from the farmers directly would be cheaper for them than buying from the cooperatives. This they could do by offering a higher price for the milk than the cooperatives. The study recommends that the Government should subsidize taxes on the dairy equipment used in the milk processing plants in order to encourage private processors. These may help especially those farmers who have no access to cooperatives due to distance. It could also widen the market for milk and milk products on behalf of the farmers and improve their income greatly. Resulting from the discussions, the study concluded that economic factors, social factors and market access all had significant positive effect on the dairy cooperatives membership among farmers in Kiambu County. Out of the three, market access was the greatest motivator for dairy cooperative membership. The study faced a few limitations including the following: due to the limited literacy levels of most respondents, the use of interview method was applied in administering the questionnaire which led to low response rate. Some of farmers were reluctant to give information despite reassurance that the study was confidential