ACADEMIC PROJECT SAMPLE

THE NYERI NATIONAL POLYTECHNIC

DIPLOMA IN CATERING AND ACCOMMODATION.

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 PAYMENT PROCEDURE IN DAIRY COOPERATIVES IN RELATION TO
MEMBERSHIP GROWTH

A RESEARCH PROJECT PROPOSAL SUBMITTED IN PARTIAL

FULFILLMENT FOR THE REQUIREMENTS FOR THE AWARD OF THE CRATF
CERTIFICATE IN CATERING AND ACCOMODATION.

NOVEMBER 2022.

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DECLARATION
I, the undersigned do declare that this research project is my original work and has not been
previously presented in part or in totality to any other institution of learning for the award of any
degree or examination.
Signature :……………………………. Date:……………………….
Knyua Onesmus Muriithi
Index No: 2020010473

This research has been submitted with my approval as the

Supervisor. Signature: …………………………….
Date………………………

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DEDICATION
I wish to dedicate this research to my parents and siblings for their support and prayers towards
the fulfillment of this project.

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ACKNOWLEDGEMENT
This research would not have been possible without the cooperation and support of a number of
people who in one way or another supported me towards my ultimate goal. I would also wish to
acknowledge the contribution of my supervisor madam for guiding and directing me in writing
this project. I would also wish to express my appreciation especially to the management of
Githunguri dairy cooperative society, Limuru daily Famers Cooperative Society and Ndumberi
dairy Farm Cooperative Society for allowing me to conduct the research in their organizations. I
also wish to acknowledge the contribution of my family and friends for their encouragement and
love that enabled me to take on with the academic practice this far,
Most importantly, I extend my gratitude to the Almighty for granting me the necessary strength,
good health and knowledge that enabled this project to come to fruition.

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ABSTRACT
Smallholder farmers produce the bulk milk of total milk marketed in the country. Despite this they face
high transaction cost in marketing their milk. This study accessed how effective cooperatives were in
increasing small dairy farmers income through minimization of transaction cost and how it has
affected the growth in membership.

The objectives of this study were to determine social economic factors influencing smallholder farmers
to become cooperative members, how effective the cooperative was in minimizing transaction cost and
the constraints and strategies of improving Dairy cooperatives. Data for this study was collected through
a cross sectional survey in 3 cooperatives in Kiambu County. Systematic random sampling employed to
select the small holders who are members of the dairy cooperatives while simple random sampling was
used for the non-cooperative members. Constrains affecting dairy cooperatives were analyzed.

The result showed that distance to market, cost of transaction influenced farmers decision to participate
in membership of dairy cooperatives. Herd size, market satisfaction, amount of milk sold, household
income, market access, price information, credit access and extension significantly affected the income
received from milk sales thereby reducing the transaction cost. The study found critical constraints
included delayed payments, lack of management skills, stiff competition from hawkers, inadequate milk
testing. The study also came up with possible strategies for improving the cooperatives. These strategies
were increased and stable market prices, better management, adequate staff and timely payments with
as a result leads to growth in membership in the cooperative society and this can lead to payment being
done 3-4 times which can be done using cash payments, cash on delivery among others. The study
recommended increased support programs by the cooperatives, local government and National
government and provision of credit facilities and technical inputs.

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Table of Contents
DECLARATION..............................................................................................................................................2
DEDICATION................................................................................................................................................3
ACKNOWLEDGEMENT.................................................................................................................................4
ABSTRACT................................................................................................................................................5
DEFINITION OF TERMS.................................................................................................................................7
CHAPTER ONE..............................................................................................................................................8
INTRODUCTION...........................................................................................................................................8
Background Information..........................................................................................................................8
1.1 Dairy Cooperative Society.................................................................................................................8
1.2) Banana Dairy Farmers Cooperative Society.....................................................................................10
1.3) Fantaci Farmers Dairy Cooperative Society....................................................................................12
CHAPTER TWO...........................................................................................................................................14
STATEMENT OF THE PROBLEM..................................................................................................................14
2.1 PAYMENT PROCEDURES IN DAIRY COOPERATIVES IN RELATION TO MEMBERSHIP GROWTH........14
2.2 AIM OF THE RESEARCH....................................................................................................................14
2.3 SPECIFIC OBJECTIVES OF THE STUDY...............................................................................................14
2.4 LITERATURE REVIEW........................................................................................................................14
2.5METHODOLOGY OF RESEARCH.........................................................................................................15
SAMPLING..............................................................................................................................................15
2.6 TOOLS OF DATA COLLECTION..........................................................................................................15
QUESTIONNARE.....................................................................................................................................15
2.7 OBSERVATION METHOD..................................................................................................................15
2.8 INTERVIEWING METHOD.................................................................................................................15
2.9 PROBLEMS FACED............................................................................................................................16
CHAPTER THREE.........................................................................................................................................17
DATA ANALYSIS AND PRESENTATION........................................................................................................17
3.1 VARIOUS MODES OF PAYMENTS AT GITHUNGURI DAIRY COOPERATIVE SOCIETY..........................17
3.2 INDICATORS OF GROWTH IN GITHUNGURI DAIRY COOPERATIVE SOCIETY.....................................18
3.3 INDICATORS OF GROWTH IN NDUMBERI FARMERS DAIRY COOPERATIVE SOCIETY........................24
CHAPTER FOUR..........................................................................................................................................29
4.1 MAJOR FINDINGS.............................................................................................................................29
4.4 SIMILARITIES....................................................................................................................................29

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DEFINITION OF TERMS

Cooperative A group of persons who work together for a common purpose

Sacco Saving and Credit Cooperative Societies
Dividends A payment of a share of profit to stakeholders in a business society or assets
to creditors
Surplus Return that the SACCOs after deduction of corporation tax and dividends to its
members is done

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CHAPTER ONE
INTRODUCTION
Background Information

1.1 KambaaDairy Cooperative Society

A) Name of The Society
The name of the society is Guthunguri Dairy and was formed in the year 1970’s in the name of
collecting milk from the farmers and selling it on behalf of its members
B) Location
The society is located in Kiambu
C) Registration
The society was established in 1970’s and was registered under the ministry of cooperative
development in the same year.
D) Membership
The society holds a population of 800 registered members. The following are the qualifications
to become a member
(i) Must be a registered member of the society
(ii) Be a dairy farmer
(iii) Must be above the age of 18
(iv) Must be of sound mind
(v) Must be a resident in the area of operation

E) Share Capital
The current share capital of the society is 30000 which has been increasing over the years
indicating growth of the society.
F) Objectives
I) Provide security to famers’ funds
II) To increase its growth in volume over the years
III) To offer the best services to its members

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G) Organization Structure

SUB-COMMITTEE (AI CONTROL DEPARTMENT)

MEMBERS

MANAGEMENT COMMITTEE

ASSISTANT MANAGER

MANAGER

ACCOUNTANT

SECRETARY

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1.2) Dairy Farmers Cooperative Society
A) Name of the Society

The society name is Limuru Dairy Farmers Cooperative Society Limited and was formed in
1948. The members constitute of the overall decision making body and through to the
democratic election. Members have vested their decision making to the management committee
and handle all the policy issues and also direct the operations of the society.

B) Location
Limuru Dairy Farmers Cooperative Society is located in Limuru town in Kiambu county.

C)Registration
The society was registered under the ministry of cooperative and development in 1949 under the
ministry of cooperative development. The aim was to help dairy farmers to sell their milk at a
favorable price and assist them in opening a savings account.

D)Objectives
I. To market the farmers proceeds
II. Increase its growth in volume of sales every year
III. Provide security to farmers funds
IV. Offer the best services to its members

E) Membership
The membership of the society increased from its initial countable numbers to 4160 active
members gathered over the years.
The qualifications of membership are:
 One must be registered with the society
 One must be 18 years and above
 One must be a dairy farmer
 One must be of a sound mind
 One must reside within the area of operation

F) Share Capital
The society recorded an increase in share capital due to additional members joining the society
and the current share capital is 12119023

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G) Organizational Structure

MEMBER

MANAGEMENT COMMITTEE

GENERAL MANAGER

CO-ORDINATOR
DAIRY FINANCE VETINARY TRANSPORT STORE
MANAGER MANAGER MANAGER MANAGER SUPERVISOR

ACCOUNTANT AI DRIVER CLERK

TECHNICIAN

LORRY LOADER STORE LOADER

SECRETARY

TEA LADY

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1.3) Ndumberi Farmers Dairy Cooperative Society
A) Name of The Society
The society name is Ndumberi Farmers Dairy Cooperative Society. It was established in the
year 1996.

B) Location
Ndumberi Dairy Cooperative Society is located in Kiamba Constituency, Kiambu county

C) Registration
The society was registered in 1996 under the ministry of cooperative development. The main
aim of the society was to help members market and sell their milk at a favorable price. The main
activities are to collect milk from farmers in different areas then bring it to the factory for
processing

D) Membership
The society has 14000 members who are registered. The following are the qualifications needed
to become a member
 Must be a dairy farmer
 Must be 18 years and above
 Must be of a sound mind
 Must reside in the area of operation
 Must contribute the share capital allocated.

E) Objectives
 To provide security to the farmers funds
 To increase in growth in the volume of sales every year
 To offer the best services to its members
 To be the largest milk producers in the county

F) Share Capital
The Society recorded an increase in share capital due to increase in milk production as a result of
more members joining the society. The current share capital being ksh15300350.

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G) Organizational Structure

COMMITTEE MEMBERS

EXECUTIVE COMMITEE

SUB - COMMITEE

MANAGER

ASSISTANT
MANAGER

ACCOUNTANT

CASHIER BOOKKEEPER
CLERK DRIVER

RECORDER

CLEANER

WATCHMAN

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CHAPTER TWO
STATEMENT OF THE PROBLEM

2.1 PAYMENT PROCEDURES IN DAIRY COOPERATIVES IN RELATION TO MEMBERSHIP

GROWTH
The researchers wanted to know the payment procedures in various dairy cooperatives. The
researchers had noted an increase in dairy cooperatives and that the payment procedures had not
been clear to its members. There was a lack of legal role in the dairy sector and with such, there
is a risk of the seller missing payment on a percentage of the total sales of the milk sold at a
profitable price.

2.2 AIM OF THE RESEARCH

The aim of the research is to establish how payment procedures have boosted growth of dairy
cooperative societies. The researcher found out that different modes of payment used in dairy
societies improve the quality of milk produced e.g. by offering animal feeds to the farmers in
kind.
The living standards of the members has improved since they are able to access loans in the
society SACCOs. The bank provides security for the farmers’ funds and are able to save by
utilizing the money only when needed.

2.3 SPECIFIC OBJECTIVES OF THE STUDY

 To establish the frequency of payments in dairy cooperative societies
 To establish different modes of payment used in dairy cooperative societies
 To establish various payment procedures used in dairy cooperative societies
 To establish the indicators of growth in the dairy cooperative societies
 To establish the relationship between payment procedures and growth in
cooperative societies

2.4 LITERATURE REVIEW

INTRODUCTION OF COMPUTER TO DAIRY SOCIETIES
Every organization needs to have packages of computers. Staff recruited within the organization
should be computer literate so that they are able to cope with the changes which is a great threat
to the employees. The use of computers will provide accurate and up-to-date information,
simplification of farmers’ payment through computation, farmers get paid in time, a number of
transactions can be done simultaneously e.g. computation of total payment and deduction of
loans.

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2.5METHODOLOGY OF RESEARCH

SAMPLING
The researcher used sampling as a method of the study. The use of the method enables the
researcher to get information and succeed in research work. The researcher has chosen two dairy
cooperative societies to represent the whole population of dairy cooperative societies
countrywide. Simple random sampling method was used. This was obtained from a list of
employees presented to the researcher by the management. This method was preferred because
each population has an equal chance of being selected and it was also economical and time
efficient.

2.6 TOOLS OF DATA

COLLECTION QUESTIONNARE
The researcher prepared a list of questions in a questionnaire and the feedback collected later
after some days. This method is an easy way of collecting data in that it reduces unnecessary
information that would arise in interviews. The researcher collected questions from the secretary
and accountant.

2.7 OBSERVATION METHOD

The researcher observed the society’s secretary writes notice for the members meeting. She
visited the SACCOs banking section and witnessed a large number of members who had to be
requested to make queues which ended up to be too long showing that the members of the
SACCO are increasing. The advantage of using this method is that less time is spent and there is
no barrier in communication.

2.8 INTERVIEWING METHOD

The interviewer (researcher) went to different societies and asked questions to different
respondents from different departments. She also interviewed some members of the society
and non-members too. The advantage of this method is that the information obtained is
detailed and there is direct feedback from the respondent.

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2.9 PROBLEMS FACED
 Financial Problems
The researcher used a lot of money to travel to different places and also questionnaires that had
to be typed.
 Biasness
Some of the respondents were not willing to give some information especially when referring to
old records and also some members and non-members who haves some special interest in the
society.
 Time Consumption
The researcher consumed a lot of time waiting to get feedback because some staff were busy
preparing payment while others were just dismissive. The researcher had to be patient so as to
acquire the required information.

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CHAPTER THREE
DATA ANALYSIS AND PRESENTATION

3.1 VARIOUS MODES OF PAYMENTS AT GITHUNGURI DAIRY COOPERATIVE SOCIETY

 Cash
This is given to members only through milk advance payment
 In Kind
This is issued to a willing member from the society’s store. The member can decide to have
farm implements and animal feeds and the payments will be deducted from the proceeds
 Through Bank
The society have SACCOs whereby withdrawal is done over the counter. Issue of cheques is also
done and loans can also be deducted.

The table below shows modes of payment in Githunguri dairy cooperative from the year 2014-2016
MODE OF 2014 2015 2016 TOTAL
PAYMENT

CASH 49,300 224,910 1,000,000 1,274,200

KIND 10,000,000 11,500,000 11,560,250 33,060,250

BANK 15,000,000 25,480,000 30,000,000 70480000

35,000,000

30,000,000

25,000,000

20,000,000 CASH
KIND BANK
15,000,000

10,000,000

5,000,000

0
2014 2015 2016

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The graph above represent the different payment procedures in Githunguri Dairy Cooperative.
The graph shows that most members prefer to be paid through the bank. This is because they
will enjoy benefits like loan access and security of funds. The second largest group of members
prefer taking in kind i.e. animal feeds, farm inputs etc. The reason is that this will help boost
their milk production. Few people prefer taking it in cash.

3.2 INDICATORS OF GROWTH IN GITHUNGURI DAIRY COOPERATIVE SOCIETY

The organization has grown as a result of effective payment of milk to the shareholders.
Membership and capital share growth is as a result of effective services from the management
and also high rate of payment compared to other milk cooperative societies. Good payment of
members has resulted to improved living standards of the members whereas the growth in share
capital has helped in purchasing new assets for the society. Members are also provided with farm
inputs like an animal feed which has helped boost the milk production.

The table below shows membership growth for the three years

INDICATORS OF GROWTH IN GITHUNGURI

YEAR 2014 2015 2016

NUMBER OF 6,600 7,800 9,100

MEMBERS

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 NUMBER OF MEMBERS
10,000
9,000
8,000
7,000
Number of members

6,000
5,000
4,000
3,000
2,000
1,000
0

2014 2015 2016

Year

INCREASE IN MEMBERSHIP

YEAR 2014 6,600 * 360 = 101

23,500

YEAR 2015 7,800 * 360 = 119

23,500

YEAR 2016 9,100 * 360 = 139

23,500

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GROWTH IN GITHUNGURI DAIRY COOPERATE SOCIETY

YEAR 2014 2015 2016

AMOUNT 1,060,000 1,235,000 1,320,000

YEAR 2014 1,060,000 * 360 = 106

3,615,000

YEAR 2015 1,235,000 * 360 = 123

3,615,000

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YEAR 2016 1,320, 000 * 360 = 131
3,615,000

TABLE FOR VOLUME OF LITRES FOR 3 YEARS

YEAR 2014 2015 2016

NO. OF LITRES 1565200 2130900 2364200

YEAR 2014 1565200 * 360 = 93

6060300

YEAR 2015 2130900 * 360 = 127

6060300

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YEAR 2016 2364200 * 360 = 140

6060300

The table below shows the surplus growth for the last 3 years

YEAR 2014 2015 2016

AMOUNT 3000000 5000000 6500000

YEAR 2014 3,000,000 * 360 = 74

14,500,000

YEAR 2015 5,000,000 *360 =124

14,500,000

YEAR 2016 6,500,000 * 360 =161

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 14,500,000

SURPLUS GROWTH
7000000

6000000

5000000
AMOUNT

4000000

3000000

2000000

1000000

0 2014 2015 2016

YEAR

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3.3 INDICATORS OF GROWTH IN NDUMBERI FARMERS DAIRY COOPERATIVE
SOCIETY
The organization has shown an increased membership growth from the year 2014-2016. The
management has indicated that it is very popular in Kiambu. The share capital has also increased
as the members increase as well as the surplus. The management has been able to pay its
shareholders the dividends at the end of the financial year. The high surplus made by the
organization each year has enabled the payment of dividends.

NDUMBERI FARMERS DAIRY MEMBERSHIP GROWTH

YEAR 2014 2015 2016

MEMBERS 10,600 11,600 12,800

YEAR 2014 10600 * 360 = 109

35000

YEAR 2015 11600 * 360 = 119

35000

YEAR 2016 12800 * 360 = 132

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 35000

Members
14000

12000

10000

8000

6000 Members

4000

2000

0
2014 2015 2016

PIE CHART REPRESENTING MEMBERSHIP GROWTH

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Surplus has increased almost twice after every year. The table below represents the volume of
sales in liters for the last 3 years.

YEAR 2014 2015 2016

NO. OF LITRES 10230000 10960000 9900000

NO. OF LITRES

9900000 10230000 2014

2015
2016

10960000

PIE CHART TO REPRESENT SUPLUS MADE BY THE SOCIETY

YEAR 2014 2015 2016

AMOUNT 1,070,000 3,570,000 5,449,000

YEAR 2014 1070000 * 360 = 38

10,089,000

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YEAR 2015 3,570,000 * 360 = 127

10,089,000

YEAR 2016 5,499,000 * 360 =194

10,089,000

The table below represents share capital for the last 3

years YEAR 2014 20900000 * 360 = 105

71300000

YEAR 2015 23600000 * 360 = 119

71300000

YEAR 2016 26800000 * 360 = 135

71300000

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 SURPLUS GROWTH
30000000

25000000

20000000

15000000
SURPLUS GROWTH

10000000

5000000

0
2014 2015 2016

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CHAPTER FOUR
4.1 MAJOR FINDINGS
The major findings of the analysis of the questionnaire on payment procedures in relation to
membership growth indicates that if the management have good planning, very many
people would join the dairy cooperative.

4.2 KEY FINDINGS

Good payment procedures are fully effected if there is good management of the SACCOs. From
the data analysis, high rate of milk payments result to growth of membership.

4.3 RECOMMENDATION
The following are some of the recommendations that the researcher has found to enforce the
payment procedure in dairy cooperative society
1. The society should give incentives to its employees and members in order to motivate
them to perform towards achieving the society’s objectives.
2. The organization should ensure that members receive payment at the right time.
3. Dairy cooperatives should build their own SACCOs to enhance growth.
4. The organization should have adequate computers that will provide up to
date information and members information will be safe.
5. All societies should carry out research and development so that they can have
adequate information on dairy payment.
6. The organization should introduce the automated Teller Machines in future so that
the shareholders may get their payments directly and access them anytime.

4.4 SIMILARITIES
1. Information Communication Technology has been introduced in every
cooperative society and has made work easier
2. Most of the cooperative society pay their members on monthly basis
3. Good accountability of the management has brought about an upward growth trend.

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