Cooperative membership and technical efficiency of smallholder dairy carbon farmers in Kenya

Smallholder agricultural carbon projects have this unique potential of improving farmers livelihoods while reducing greenhouse gas emissions. Involvement of cooperatives in the implementation of carbon projects can improve smallholder’s efficiency. This study examines the impact of dairy cooperative membership on the technical efficiency of smallholder dairy carbon farmers in Kenya. The study used the stochastic frontier model to estimate the technical efficiency and the endogenous switching regression model to assess the impact of cooperative membership on the technical efficiency of smallholder dairy carbon farmers in Trans-Nzoia and Bungoma Counties of Western Kenya. The findings show that on average, smallholders are 35.3 percent technically efficient, suggesting that milk yield levels could be further increased by 64.7 percent through efficient application of existing inputs without increasing the current input levels. On average, cooperative members have lower technical efficiency compared to non-members. The results further reveal that farm location and family labour are the major factors that influence cooperative membership. Furthermore, the average treatment effect on the treated (ATT) and the average treatment effect on the untreated (ATU) of 0.311 and 0.251 respectively, were observed. This implies that smallholders who belong to dairy cooperatives would reduce their efficiency by 31 percent if they did not join while non-members could increase their efficiency by 25 percent if they join. This is an indication of a positive relationship between cooperative membership and technical efficiency. In general, the study concludes that without critical sources of heterogeneity, cooperatives can support smallholder carbon farmers to improve their efficiency.