A Survey of the Factors Motivating and Challenges Affecting Exporting Activities of the Firms in the Dairy Industry in Kenya

Abstract

The unmistakable fact is that exporting is becoming increasingly important as companies in all parts step up efforts to supply and service markets located outside their national boundaries. Export behavior is an incremental and developmental process, which follows various stages before a firm, becomes fully involved and experienced in exporting. Various firms use exporting as an initial entry mode since it is a low-risk alternative, do not demand large capital outlay or resources and is relatively easy and less costly to withdraw from the arrangement. The main objective of the study was to carry out a survey of the factors and challenges affecting exporting activities of the firms in the dairy industry in Kenya. This study used a descriptive survey design where the population of interest was firms in the dairy industry involved in the processing and exporting of dairy products. A complete census of all the seven (7) firms involved in both processing and exporting activities during 2007. Primary data was collected using a questionnaire (appendix 2) which was administered on the drop and pick later method for those within Nairobi .For those respondents outside Nairobi, it was sent by post with a self addressed envelope for return to Chief Executive Officers (CEO's) of the population of the study. Data was analyzed using SPSS. These included the mean, mode and standard deviations where appropriate. In summary, the researcher found that, majority of the firms exporting dairy products were highly motivated by the profits from exports as well as to counter declining domestic sales. In addition, these firms exporting dairy products do experience the problems of perishability of the raw milk as well as high costs of inputs as major challenges. The government should therefore reduce tari ffs imposed on milk processing machines to ensure that all firms in the dairy industry are able to process and preserve the milk products cost effectively. Also they should give full cost capital allowances, duty free importation and value added tax (VAT) exemption to all those investing in processing machinery and equipment .This will cut back on costs of production as well as curtailing considerably the abnormal losses that face dairy firms.