A farm worker milking a cow, Naivasha, Kenya.
Photo: ©FAO/Simon Maina

19.02.2019

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Most workers and agricultural producers in developing countries are paid on a daily basis. This has a negative impact on their ability to generate savings for large expenses. Researchers show that Kenyan dairy farmers would prefer to be paid once at the end of the month in order to increase their savings.

Monthly wages are an important step towards economic development, according to researchers from the University of Zurich (UKH), Switzerland. Their study, published in February 2019, shows  that dairy farmers and agricultural workers prefer to be paid once at the end of the month rather than daily, since monthly payment schemes are an efficient tool to increase savings.

Dairy farmers in central Kenya typically own two or three cows and produce and sell milk on a daily basis. They need the cash for daily consumption, but also need to set aside money for larger investments, such as cow feed or school fees. Previous research has shown that people struggle to build up savings or to cover unexpected one-off expenses when they are on a low, daily income.

Farmers would choose monthly payments, even if they are lower

When Kenyan dairy farmers are faced with the choice of receiving monthly or daily payment for their milk, 86 per cent of the farmers chose to receive end-of-month payments, even if this meant a 15 per cent lower price per litre of milk.

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