Determinants of transaction costs in group-based breeding approaches: the case of dairy goats in the eastern Kenyan highlands

Abstract

Exotic dairy goats were introduced in the eastern Kenyan highlands by FARM- Africa through a group-based approach about a decad e ago. Interested farmers had to organize themselves into legally recognized farmers’ groups which would then register with dairy goat breeding stations est ablished by this international non-governmental organization. It was only after su ch a collective action process that individual farmers accessed Toggenburg bucks ( imported from Europe), local markets for kids and milk, and dairy goats’ h usbandry techniques. This process made local communities incur several catego ries of transaction costs whose huge magnitudes hindered some poor farmers fr om participating in the dairy goat breeding activities. It is also expected that transaction costs were induced by transaction attributes, e.g. asset speci ficity, bounded rationality, etc. that are to a large extent dependent on farmers’ so cio-economic conditions and farm characteristics. The relevance of these factor s in determining magnitudes of transaction costs in group-based small ruminants br eeding approaches has not been so far extensively investigated. This is parti cularly so in the developing world. Using a case study of 165 randomly selected farmers in the Kenyan highlands’ Meru District this paper analyzes determ inants of transaction costs of farmers’ participation in dairy goat breeding activ ities. The paper uses econometric analyses to generate these factors and derives important policy implications that would positively influence future targeting strategies in dairy goat breeding programmes in Kenya.