Choice of Coordination Mechanism in the Kenyan Fresh Milk Supply Chain

This paper examines the nature and determinants of coordination mechanisms used in the Kenyan fresh milk supply chains, using recent survey data of market participants from Nakuru and Nyandarua districts in Kenya. Three main contractual arrangements are observed in the fresh milk supply chain. These include spot markets, verbal contracts and written contracts. The empirical results indicate that though written contracts are sparingly used in the milk transactions, milk producers are more likely to adopt such contracts compared to traders. The results also show that location of producer, source of market information, distance to markets, travel time to buyers or suppliers, gender of operator, and presence or absence of enforceable contracts significantly influence the type of coordination mechanism used in both producer–buyer and retailer–seller transactions and travel time to milk suppliers.