Determinants of farmers’ decision to choice market outlets: evidence from milk producer farmers in Ada’a Berga district, Ethiopia

In Ethiopia, many initiatives have been implemented to empower smallholder dairy farmers to develop viable livelihoods from the sector. The problem with these policies is the inability to reach farmers at large, and dairy farmers in rural areas are always challenged to deliver milk and milk products faster to the final market. The study was aimed at investigating factors that influence market channel choices among dairy producers in Ada’a Berga district Ethiopia. This paper uses data from a survey of 123 dairy producer households in four rural kebeles to analyse the factors that influence the choice of a milk marketing channel. Multivariate probit econometric model results show that income from dairy source, market information and educational level of household affected wholesaler outlet. The choice of consumer outlet is influenced by family size, membership in a dairy cooperative, market information, non-dairy income and income from dairy source. Number of milking cows, membership in a dairy cooperative and non-dairy income determined the choice of dairy cooperative outlet. The choice of district retailer’s market outlet was affected by sex of households, membership in a dairy cooperative and income from dairy sources. Choice of rural collector outlet is negatively influenced by non-dairy income and access to an extension contact. Therefore, policies should be designed that encourage farmers’ cooperatives, contract farming and collective action in order to lower transaction costs, expand market information for dairy producers, expand extension services and expand infrastructures such as road and transportation facilities, which are needed to promote the effective marketing of milk through all outlets.