What factors influence smallholder farmers’ decision to select a milk marketing channel in Zambia?

ABSTRACT Farmers are faced with computational and informational limitations when making marketing decisions. This holds true for Zambian dairy farmers. This study examined the factors that influence the choice of milk marketing channels among 251 smallholder farmers in Zambia participating in milk production and marketing using a multinomial logit model approach. Three milk marketing channels were identified: direct, traditional, and modern. Relative to the base category (direct), the results indicate that gender and volume of milk produced positively influenced participation in the traditional marketing channel. However, off-farm income had a negative influence on the selection of the traditional marketing channel. Gender, education, distance to major markets, and volumes of milk produced influenced the decision to participate in the modern marketing channel. There seems to be an underutilisation of the modern marketing channel. The study identified the following factors to stimulate participation in the modern marketing channel: (i) concerted value chain investments, (ii) government intervention in the form of policy changes, (iii) increased access to market information, (iv) support services, and (v) transparency in the milk value-chain. Understanding the factors that influence farmers' participation in the informal channels enables tailored policies to support the formalisation of existing structures in the informal sector.