Dairy Farmers’ Choice of Milk Market Outlets: Evidence from Farm Households in Central Ethiopia

Abstract

This study examines dairy farmers’ choices of marketing channels and factors that determine their choices using primary data collected from households in central Ethiopia. We use the multinomial logit model to analyze the data and investigate factors affecting farmers’ choices of whether to sell to local consumers market, cooperative unions, hotels/restaurants, or milk processing plants. The results show that households’ number of milking cows, household size, and the relative price of milk increase farmers’ likelihood of choosing the milk processing plant channels compared to local milk consumers. Access to information, dairy farming experience, cooperative membership, and market information increase farmers’ probability to choose cooperative market outlets while access to dairy extension services and modes of payment affect farmers’ choices of hotel/restaurant channel. These findings imply that creating better extension services and information can improve farmers’ awareness and the need to increase market efficiency through farmers’ development capability to organize and access to updated information and better marketing channels.