Determinants of milk market channel choice decisions among smallholder dairy producers in Sidama region, Southern Ethiopia

Understanding market channel choice decisions among smallholder dairy producers is crucial to improving milk marketing efficiency in Ethiopia. This study investigates the determinants influencing the selection of milk market channels in selected districts of the Sidama region. Primary data were collected from 361 smallholder dairy producers through multistage sampling and analyzed using a multivariate probit model. The results revealed that dairy producers utilize four main marketing channels: dairy cooperatives, wholesalers, retailers, and direct consumer sales, with dairy cooperatives being the most preferred. The model showed that dairy farming experience, distance to market, dairy income, breed type, milk volume, number of milking cows, milk price, and cooperative membership significantly increased the likelihood of selecting dairy cooperative channels. Education level, market information, and milking cows positively influenced the use of wholesaler channels, while greater distance and larger family size reduced their use. Retailer channel choice was influenced by sex, education, off-farm income, and breed type, while consumer sales were more likely among households with larger family sizes but lower production volumes. The findings highlight the importance of promoting dairy cooperatives, improving farmers’ technical knowledge, expanding access to improved breeds, and enhancing market infrastructure, and information access. Strengthening these areas can improve income opportunities and market participation for smallholder dairy producers in the region.