Structure of the Small and Medium Informal Dairy Enterprises in Olenguruone and Bahati Sub-Counties

Abstract

This paper examines the drivers of the small and medium informal dairy enterprise engagement in Nakuru County in Kenya, specifically Olengruone and Bahati Sub-counties. A sample of 196 dairy enterprises was selected through stratified random sampling technique. The analytical approach used in evaluating the drivers in engagement in informal systems in terms of structural market entry involved combining Lorenz curve and the Gini coefficient methodologies. Results returned a Gini coefficient of 0.4295, which confirmed a significant dispersion between informal milk sales and income distribution between the traders in the county. The coefficient also depicts a competitive market with reduced problems of price collusions and shortages of milk supplies. However, the results indicated that the milk industry in Nakuru County was not efficient implying that any additional marketing services undertaken by traders reduced the output-input ratio as a negative marketing efficiency was established at 1% level of significance. Based on the findings, the study recommends that traders should be facilitated to vibrant groups through formulation of policies that strengthen and streamline informal dairy sector by restricting monopolistic tendencies to create a level playing field for all milk traders in the industry.

Keywords: Structure: Regulation: Informal: Lorenz curve: Gini coefficient: Competitive market: Marketing efficiency: Monopoly: Oligopoly

DOI: 10.7176/JESD/10-22-05

Publication date: November 30^th 2019