Production at the Kenya Agricultural and Livestock Research Organization centres has dropped by more than 50 per cent in the last four months.
An officer who declined to be named said the problem started last year when payment, through e-Citizen was introduced.
The payment system has seen Kalro face cash flow problems, paralysing research work in some of the centres.
"Unfortunately money paid through e-Citizen does not come back to support other activities," the source said.
The situation has seen the research centres run out of basic items such as livestock feed and vaccines.
Farmers have also been forced to wait longer for their orders.
The Naivasha centre, which is known for improved chicken, dairy and fodder production has also been affected.
Further, more than 100 workers who were on contract have either been sent home or salaries revised downwards due to the current crisis.
“For years, revenue generated from sale of livestock products and poultry was used to buy dairy meal, veterinary drugs and other farm inputs and now this has been taken,” said the officer.
The situation has affected workers' and farmers' morale.
“We have many orders from farmers and county governments but we cannot meet them due to the crisis,” the officer said.
Kalro director general Eliud Kireger however downplayed the situation and said the financial crisis caused by the transition to e-Citizen has been resolved.
He said research centers have received part of their budgetary allocation.
“There was this problem in the initial days but the government has since released the necessary cash to all the research centers,” Kireger said.
For years, research work in the country was underfunded and many cases relied on donor support.
“The delay in farmer’s order is due to the high demand from county governments but we are working overnight to address this,” he said.