Kenya's stated policy is to increase dairy production through sustained liberalization of output and input markets. The present study assessed dairy farmers' responsiveness to both market price factors and non-price factors within a liberalized market environment. Econometric analysis used in the study is based on a profit function using farm household survey data collected for a year. Results showed that dairy farmers are more responsive to non-price factors than to price factors. Hence the need for a consistent and a sustained liberalization program in the sub-sector, as well as reinforcing liberalization policies in place by increasing public expenditure on rural infrastructure and other agricultural support services. Copyright © 2010 John Wiley & Sons, Ltd.