Carbon Projects, Cooperative Membership and Technical Efficiency of Smallholder Dairy Farmers in Kenya

Abstract

The development and implementation of smallholder agricultural carbon projects offer opportunities for sustainable dairy production. Understanding the role of institutions such as cooperatives and the efficient use of resources by farmers in carbon projects is crucial to achieving sustainable agriculture and reduced greenhouse gas emissions. The main objective of this study is to explore the role that cooperatives can play in agricultural carbon projects and to understand the efficient use of resources by participating farmers, using a pioneering project as a case study. A mixed methods approach was used. Ten focus group discussions and in-depth interviews were conducted in addition to a household survey with 153 participants. A participatory and visual mapping tool (Net Map) was used to understand the interaction between cooperatives and other actors in the project, and stochastic frontier and endogenous switching regression models were used to analyse the impact of cooperative membership on technical efficiency. The results show that dairy cooperatives promote the adoption of sustainable practices and support carbon monitoring and reporting. Cooperative membership is positively related to technical efficiency, although non-members in our study appear to have higher technical efficiency. This finding could be due to the challenges faced by cooperatives, especially newly established ones. The results also reveal information asymmetries in voluntary carbon markets. Despite their important role, information asymmetry limits the full potential of cooperatives to promote sustainable agriculture. The study provides insight into the important role of cooperatives in the face of climate change and sustainable dairy farming. It serves as a guide not only for carbon project managers, but also for other development project developers to strengthen the participation of cooperatives in climate change mitigation and sustainable agriculture.

Keywords: Stochastic production frontier, Endogenous Switching Regression, East Africa, milk productivity, farmer groups, producer organisations