




































 
African Journal of Agricultural Marketing Vol. 1 (2), pp. 024-031, December, 2013. Available online at 
www.internationalscholarsjournals.org © International Scholars Journals 

 

 

Full Length Research Paper 
 

Factors affecting milk market outlet choices in Wolaita 
zone, Ethiopia 

 

Berhanu Kuma
1
*, Derek Baker

2
, Kindie Getnet

3
 and Belay Kassa

4
 

 
1
EIAR, Holetta Agricultural Research Center, P. O. Box 2003, Addis Ababa, Ethiopia. 

2
Research 

Economist, International Water Management Institute, P. O. Box 5689, Addis Ababa, Ethiopia. 
3
Senior Agricultural Economist and Agricultural Marketing Program Leader, ILRI, Nairobi, Kenya. 

4
Haramaya University, P. O. Box 138, Dire Dawa, Ethiopia. 

 
Accepted 15 May, 2013 
 

The study was undertaken with the objective of assessing factors affecting milk market outlet choices 
in WOLAITA zone, Ethiopia. Using farm household survey data from 394 households and Multinomial 
Logit Model, milk market outlet choices were analyzed. Multinomial Logit model results indicate that 
compared to accessing individual consumer milk market outlet, the likelihood of accessing cooperative 
milk market outlet was lower among households who owned large number of cows, those who 
considered price offered by cooperative lower than other market outlets and those who wanted 
payment other than cash mode. The likelihood of accessing cooperative milk market outlet was higher 
for households who were cooperative member, who owned large landholding size, who had been in 
dairy farming for many years and who received better dairy extension services. Compared to accessing 
individual consumer milk market outlet, the likelihood of accessing hotel/restaurant milk market outlet 
was lower among households who were at far away from urban center and higher among households 
who accessed better dairy extension services and who owned large number of dairy cows. As one of 
the key factors to boost milk market outlet choices, dairy extension services should be strengthened 
through redesigning or reforming implementation strategies or improving/strengthening existing policy. 
It should be strengthened to enable farmers produce surplus milk for markets and should devise means 
to reduce local milking cow numbers by replacing them with crossbred cows. Moreover, governments 
should strengthen milk processing cooperatives and improve infrastructure facilities. 

 
Key words: Factors, milk market, participation, volume of supply, Wolaita zone. 

 
 
INTRODUCTION 
 
Development policy of Ethiopia has placed an emphasis 
on increasing agricultural production to serve as a base 
for rural development. Even though there have been an 
increase in agricultural production, its attempt 
experienced drawbacks in the absence of household’s 
market participation. The lack of market participation that 
many agricultural households face is considered to be a 
major constraint to combating poverty (Best et al., 2005). 
This shows that an efficient, integrated and responsive 

 
 
 

 
market that is marked with good performance is of crucial 
importance for optimal allocation of resources and 
stimulating households to increase output (FAO, 2003). 
Thus facilitating market participation of households as 
well as developing chain competitiveness and efficiency 
are valuable preconditions to improve livelihoods (Lundy 
et al., 2004; Padulosi et al., 2004). Unless farm 
households adjust to rapidly changing markets which are 
characterized by quality and food safety, vertical integration, 

 
*Corresponding author. E-mail: berhanukuma@yahoo.com. Tel: 0911352296.  



Kuma  et al.              024 
 
 

 
standards and product traceability, reliability of supply, 
there will be a risk of competitiveness and inefficiency for 
the entire value chain (Vermeulen et al., 2008). 
Household market participation is an important strategy 
for poverty alleviation and food security in developing 
countries (Heltberg and Tarp, 2002). Moreover, 
increasing household participation in markets is a key 
factor to lifting rural households out of poverty in Africa 
countries (Delgado, 1995).  

The literature on market outlet choices has been thin, 
especially in developing countries where significant 
frictions make this question most salient. Goetz (1992) 
studied participation of Senegalese agricultural 
households in grain markets. He used probit model to 
analyze household’s discrete decision either to participate 
in a market or not which was followed by a second-stage 
regression model to analyze the extent of market 
participation. Key et al. (2000) developed a structural 
model to estimate structural supply functions and 
production thresholds for Mexican households’ 
participation in maize market, based on a censoring 
model with an unobserved censoring threshold. Holloway 
et al. (2005) used a Bayesian double-hurdle model to 
study participation of Ethiopian dairy farmers in milk 
market when non negligible fixed costs lead to non zero 
censoring, as in Key et al. (2000), but distinguishing 
between discrete participation and continuous volume 
marketed, as in Goetz (1992). Some others studied 
livestock and livestock products marketing in parts of 
Ethiopia (Holloway et al., 2000; Yigezu, 2000; Muriuki 
and Thorpe, 2001; Tsehay, 2001; Mohammed et al., 
2004; Woldemichael, 2008). However, none of past 
studies identified factors affecting milk market outlet 
choices in Wolaita zone, Ethiopia.  

Wolaita zone is one of the potential milk production and 
marketing areas in Ethiopia. In the zone, it is common to 
see household choices among milk market outlets. Then, 
what motivate households to choose among milk market 
outlets available in the study area? Systematic 
identification of factors faced by households in market 
outlet choice is increasingly seen by agricultural research 
as important component of any strategy for reaching the 
millennium development goals (Giuliani and Padulosi, 
2005). Given Wolaita zone’s potential for milk production, 
processing, marketing and consumption, results of the 
study become essential to provide vital and valid 
information for effective research, planning and policy 
formulation. Therefore the study provides an empirical 
basis for identifying options to increase milk market outlet 
choices of households. In doing so, the study attempts to 
contribute to filling the knowledge gap by assessing 
factors affecting milk market outlet choices in Wolaita 
zone, Ethiopia. 

 
METHODOLOGY 

 
 
 

 
representative households from the study area. In the first stage, 
Wolaita zone was selected purposively as it is one of the potential 
milk production, processing, marketing and consumption areas of 
the country. Within the zone, four rural districts/weredas (Sodo 
zuria, Bolosso Sore, Ofa and Damote Gale) and one town (Wolaita 
Sodo) were selected purposively on the basis of milk production, 
marketing and consumption potential. Then 33 peasant 
associations/kebeles from the weredas and the town were selected 
purposively on the basis of milk production and market participation 
potential. Sample frame of the kebeles was updated and sample 
size was determined using a simplified formula provided by 
Yamane (1967). Out of the total 32,972 households, 398 
households were selected using simple random sampling methods. 
However, four households with inappropriately filled questionnaire 
and missing data were dropped and the data set to 394 households 
were analyzed.  

Both quantitative and qualitative data types were used in the 
study under investigation. In order to generate these data types, 
both secondary and primary data sources were used. Secondary 
sources include reports of line ministries, journals, books, Central 
Statistical Authority (CSA) and internet browsing, national policies, 
zonal and wereda reports, among others. Primary data sources 
include zonal and weredas Agricultural and Rural Development 
Offices, zonal and weredas Agricultural Marketing Offices, Wolaita 
Sodo Cattle Breeding and Multiplication Center and dairy 
households. The major data collection methods used includes 
discussions, rapid market appraisal, observation, formal survey and 
visual aids. Survey questionnaires were prepared and pre-tested for 
households operating within the study area. Using the 
questionnaire, interviews were conducted to gather data on 
household characteristics, socioeconomic and demographic 
characteristics, farm information, input utilization, and access to 
services such as extension, credit and information, technology use, 
milk production, milk market outlets, among others. Trained and 
experienced enumerators collected data from households during 
July and August, 2010.  

Two types of data analysis, namely descriptive statistics and 
econometric models were used to analyze the data collected from 
households. Descriptive method of data analysis included the use 
of ratios, percentages, means and standard deviations in the 
process of comparing socioeconomic, demographic and institutional 
characteristics of households. To identify factors affecting milk 
market outlet choices, multinomial logit model was used. If there are 
a finite number of choices (greater than two), multinomial logit 
estimation is appropriate to analyze the effect of exogenous 
variables on choices. The multinomial logit model has been widely 
used by researchers such as Schup et al. (1999) and Ferto and 
Szabo (2002). It is a simple extension of the binary choice model 
and is the most frequently used model for nominal outcomes that 
are often used when a dependent variable has more than two 
choices. The results revealed that households accessed milk 
market outlets such as individual consumer, cooperative, 
hotel/restaurant and combinations thereof. However, due to 
mutually inclusiveness of choices, fewer representation and similar 
collection and operation practices, only households who had access 
to individual consumer, cooperative and hotel/restaurant milk 
market outlets were considered in multinomial logit regression. For 
estimation purpose, the base category used was access to 
individual consumer; thus the model assessed the effects of various 
independent variables on the odds of two market outlets versus 
access to individual consumer market outlet. The general form of 
the Multinomial Logit model is (McFadden, 1973; Long, 1997): 
 

P ki 
exp( x  i  '  β k ) 

 

     

J    
 

      

  ∑exp( x  i '  β j  ) 
 

A  multistage  random  sampling  procedure  was   used  to  select 
 

K1 (1) 



025       Afr. J. Agric. Mark. 
 
 

 

for i  1,2 − −−, N; K  1,2,− − −, J 

 

  
 
 
Milk price by market outlet (PRICE) 

 
             This  is  a  continuous  independent  variable  that  is  measured  in 

 

where 
P

 is the likelihood that a household i chooses to access J Ethiopian birr. It is the actual price received by a household per liter 
 

of milk sold to milk market outlets. Staal et al. (2006) found out that  

            

xi   is 
 

milk  market outlet from  K milk market outlet choices; the  better  the  price  offered  by  milk  market  channel,  the  more  a 
 

explanatory variable vector  that  contains  the set of  factors about household prefers that outlet for accessing and selling milk. They 
 

found out that price offered per liter of milk by individual consumer 
 

household attributes and socioeconomic and   demographic  

was lower than price offered by private trader and cooperative and 
 

characteristics; and β  j   is a vector of parameters   relating 
 

thus  households  accessed  these  market  outlets  than  accessing  

explanatory variables to the valuation of K outlets (K =1, 2, 3). 
  

 individual consumer  milk  market  outlet.  Therefore, the variable is  

 

The marginal effects are obtained  from  the logit  regression  

 hypothesized to affect accessing individual consumer milk market  

results by the following equation: 
      

     outlet  positively  as  compared  with  accessing  cooperative  milk  

              

             market   outlet   and   negatively   as   compared   with   accessing 
 

 ∂Pji 

  Pji  β j   − ∑ 

P
ki 
β

 k  


 

     hotel/restaurant milk market outlet. 
 

       
 

         

 ∂X ji     
(2) Size of milk output (YIELD)  

            

            
 

 
Where 

β
 and 

P
 represent the parameter and likelihood, 

respectively, of one of the choices. Marginal likelihood gives better 

indications and represents changes in dependent variable for a 

given change in a particular explanatory variable whereas holding 

the other explanatory variables at their sample means. The models 

are estimated under maximum likelihood procedures, which yield 

consistent, asymptotically normal and efficient estimates.  
The data covered information necessary to make household level 

indices of social, economic, demographic and institutional indicators 
comparable across different categories of households and milk 
market outlets. In order to identify factors affecting household milk 
market outlet choices, continuous and discrete variables were 
identified based on economic theories and empirical studies as 
follows. 
 
 
Market outlets (ACCESS) 
 
This is a categorical dependent variable that represents milk market 
outlets of the study area. The results revealed that households had 
three milk market outlets and combinations thereof. However, due 
to mutually inclusiveness of outlets, fewer representation and 
similar collection and operation practices, only households who had 
access to individual consumer, cooperative and hotel/restaurant 
milk market outlets were considered in the regression. Accordingly, 
dependent variables were created from the data, which indicated 
sales to (1) individual consumer, (2) cooperative and (3) 
hotel/restaurant. For estimation purpose, the base category used 
was access to individual consumer; thus the model assessed the 
effects of various independent variables on the odds of two milk 
market outlets versus access to individual consumer milk market 
outlet. 
 
 
Mode of milk sale (PAY) 
 
This is a dummy independent variable that takes the value 1 if 
mode of milk sale is in cash and 0 otherwise. Most households 
need cash from milk sale to purchase household needs such as 
soap, salt, food, etc and want payment to be made in cash. Staal et 
al. (2006) found out that cash mode of payment negatively and 
significantly affected accessing cooperative and private trader milk 
market channel selection as compared with accessing individual 
consumer milk market channel. Therefore, cash based mode of 
payment is hypothesized to affect accessing individual consumer 
milk market outlet positively as compared with accessing 
cooperative and hotel/restaurant milk market outlets. 

 
This is a continuous independent variable measured in liter. Past 
studies revealed that milk yield per day significantly and positively 
affected marketed surplus of milk (Singh and Rai, 1998; 
Woldemichael, 2008). Therefore, the variable is hypothesized to 
affect accessing hotel/restaurant milk market outlet positively than 
others because of hotel/restaurant capacity to purchase large 
volume of milk. 

 
Distance to the nearest urban center (DIST) 
 
This is a continuous independent variable measured in kilometer. 
The closer a household to the nearest urban center, the lesser 
would be transportation costs, loss due to spoilage and better 
access to market information and facilities. Berhanu and Moti 
(2010) found out negative relationship between market participation 
and distance to the nearest urban market center. Therefore, 
households who are at far away from urban center are 
hypothesized to affect the likelihood of accessing cooperative milk 
market outlet positively as compared with accessing other milk 
market outlets. 
 
 
Education of household head (EDU) 
 
This is a dummy independent variable that takes the value 1 if a 
household head had attended formal schooling and 0 otherwise. 
Literate households are expected to have better skills and better 
access to information and ability to process information. Education 
plays an important role in adoption of new technologies and 
believed to improve readiness of a head to accept new ideas and 
innovations. It also enables a head to get updated demand and 
supply information. Therefore, formal education of household head 
is hypothesized to affect accessing hotel/restaurant milk market 
outlet choice positively as compared with accessing other milk 
market outlets. 
 

 
Age of household head (AGE) 

 
This is a continuous independent variable that is measured in 
years. Tshiunza et al. (2001) identified age of a household head as 
a major household characteristic that significantly affected the 
proportion of cooking banana plant for markets. They found out that 
young aged household heads tended to produce and sell more 
cooking banana than older aged household heads. Therefore, being 
young aged household head is hypothesized to affect 



Kuma  et al.              026 
 
 

 
accessing hotel/restaurant milk market outlet choice positively as 
compared with accessing other milk market outlets. 
 
 
Sex of household head (SEX) 
 
This is a dummy independent variable that takes the value 1 if the 
head of a household is male and 0 otherwise. Female contribute 
more labor in the area of feeding, cleaning of bans, milking, butter 
and cottage cheese making and sale of dairy products. However, 
such constraints as lack of capital and poor access to institutional 
credit and extension service, may affect female participation in dairy 
production and markets (Tanga et al., 2000). Due to their potential 
dairy production advantages over female headed households, male 
headed households are expected to be more market oriented. 
Therefore, being male headed household is hypothesized to affect 
accessing hotel/restaurant milk market outlet choice positively as 
compared with accessing other milk market outlets. 
 
 
Household size (HSIZE) 
 
This is a continuous independent variable that is measured in the 
number of members in a household. Household size increases 
domestic consumption requirements and may render households 
more risk averse. Families with more household members tend to 
consume more milk which in turn decreases milk market 
participation and marketed milk surplus. Hence, controlling for labor 
supply, larger households are expected to have lower market 
participation. Heltberg and Trap (2002), Lapar et al. (2003), 
Edmeades (2006) and Berhanu and Moti (2010) found out negative 
relationship between household size and market participation of 
households. It is therefore hypothesized to affect accessing 
cooperative milk market outlet choice positively as compared with 
accessing other milk market outlets. 
 
 
Access to dairy extension services (EXT) 
 
This is a dummy independent variable taking the value 1 if a 
household had access to dairy extension services and 0 otherwise. 
It is expected that dairy extension service widens household 
knowledge with regard to use of improved dairy technologies. 
Agricultural extension services are expected to enhance 
households’ skills and knowledge, link households with technology 
and markets (Lerman, 2004). The number of extension agent visits 
improves household’s intellectual capitals and helps in improving 
dairy production and impacts milk market outlet choices. Past 
studies revealed that extension agent visits had direct relationship 
with market outlet choices (Holloway and Ehui, 2002; Rehima, 
2006). Thus access to dairy extension service is hypothesized to 
affect accessing hotel/restaurant milk market outlet choice positively 
as compared with accessing other milk market outlets. 
 
 
Access to market information (INFOM) 
 
This is a dummy independent variable taking the value 1 if a 
household had access to market information services and 0 
otherwise. Households marketing decision is based on market price 
information. Poorly integrated markets may convey inaccurate price 
information leading to inefficient product movement. Study 
conducted by Goetz (1992) on food marketing behavior showed 
that better market information significantly raised likelihood of 
market participation of households. Therefore, the variable is 
hypothesized to affect accessing hotel/restaurant milk market outlet 

 
 
 

 
choice positively as compared with accessing other milk market 
outlets. 
 
 
Milking cow ownership (COW) 
 
This is a continuous independent variable measured in the number 
of milking cows owned by a household in TLU. As the number of 
dairy cows owned increases, milk production increases and 
percentage share of consumption declines and milk sales increase 
(Holloway and Ehui, 2002). Past studies indicated that the variable 
showed positive and significant relationship with market 
participation and marketable milk volume (Holloway and Ehui, 2002; 
Gizachew, 2005). Therefore, the variable is hypothesized to affect 
accessing hotel/restaurant milk market outlet choice positively as 
compared with accessing other milk market outlets. 
 
 
Presence of children under six years of age (CHILD) 
 
This is a dummy independent variable taking the value 1 if a 
household had at least a child less than six years of age and 0 
otherwise. There is a competition between milk for child 
requirement and the amount needed for market. Staal et al. (2006) 
included the variable in probit model and found out that the variable 
revealed negative relation to milk market outlet choices. Therefore, 
households with at least a child under age six are hypothesized to 
affect accessing cooperative milk market outlet choice positively as 
compared with accessing other milk market outlets. 
 
 
Dairy farming experience (EXP) 
 
This is a continuous independent variable measured in the number 
of years a household has been engaged in dairy farming. 
Households who have been in dairy farming for many years are 
expected to have rich experiences regarding opportunities and 
challenges of dairy production, processing and marketing. Staal et 
al. (2006) included the variable in probit model and found out that 
the variable revealed positive relation to milk market participation 
and market outlet choice. Therefore, the variable is hypothesized to 
affect accessing cooperative milk market outlet choice positively as 
compared with accessing other milk market outlets. 
 
 
Landholding size (LAND) 
 
This is a continuous independent variable measured in hectare. As 
input for dairy production, land is very important for forage and 
pasture development to feed dairy cows. It is expected that as the 
size of land increases, the proportion of land allocated for feed 
development and improvement increases. According to Staal et al. 
(2006) the variable has shown negative relationship with milk 
market participation and market outlet choice. However, in this 
study the variable is hypothesized to affect accessing cooperative 
milk market outlet choice positively as compared with accessing 
other milk market outlets. 
 
 
Membership to cooperative (MEMB) 
 
This is a dummy independent variable that takes the value 1 if a 
household has a membership to cooperative and 0 otherwise. 
Households who are member to cooperative are supposed to sell 
milk to milk processing cooperative rather than selling to individual 
consumer and hotel/restaurant. Therefore, membership to 
cooperative is hypothesized to affect accessing cooperative market 



     
 

Table 1. Mean household characteristics by milk market outlets     
 

    
 

Variable 
Mean (Standard deviation) of market outlets   

 

Individual consumer (N=118) Cooperative (N=46) Hotel/restaurant (N=118)  

 
 

Age of household head (year) 44.4(10.83) 45.3(13.04) 43.51(8.96)   
 

Household size (number) 5.86(2.11) 6.39(2.40) 5.58(1.87)   
 

Distance to the nearest urban market (km) 2.27(1.61) 3.36(2.16) 1.78(1.39)   
 

Dairy cow in TLU 2.47(1.36) 1.91(1.31) 2.97(1.81)   
 

Milk yield per day (liter) 10.02(3.03) 7.54(1.74) 10.44(3.31)   
 

Dairy farming experiences (year) 8.7(3.81) 19.46(3.25) 7.02(3.77)   
 

Milk price by outlet per liter (Birr) 5.40(1.21) 4.50(0.51) 5.27(0.97)   
 

Land holding size (ha) 0.96(0.07) 1.41(1.45) 0.48(0.31)   
  

Source: Authors collection, July and August 2010. 
 
 
 
outlet positively as compared with accessing other milk market 
outlets. 
 

 
RESULTS AND DISCUSSION 

 
Mean household characteristics by milk market 
outlets 

 
The mean household characteristics by milk market 
outlets are provided in Table 1. The mean household size 
by milk market outlets was 5.9, 6.4 and 5.6 with individual 
consumer, cooperative and hotel/restaurant, respectively. 
The mean household size for households who accessed 
cooperative milk market outlet was higher than the mean 
household size (6.0 people) in the rural areas of southern 
Ethiopia (CSA, 2007). The mean age of household heads 
that had access to individual consumer, cooperative and 
hotel/restaurant milk market outlets was 44, 45 and 43.5 
years, respectively. The mean dairy cow ownership of 
households who had access to cooperative, individual 
consumer and hotel/restaurant milk market outlets was 
1.9, 2.5 and 3.0 TLU, respectively. This indicates that 
households that owned large dairy cows accessed 
hotel/restaurant milk market outlet because of 
hotel/restaurants’ capacity to purchase large amount of 
milk.  

On average 10, 7.5 and 10.4 L of milk per day was 
accessed by individual consumer, cooperative and 
hotel/restaurant market outlets, respectively. The mean 
dairy farming experience was highest for households who 
had access to cooperative (19.5 years) milk market outlet 
and lowest to households that had access to 
hotel/restaurant (7 years) market outlet. This indicates 
that households who had access to cooperative milk 
market outlet were engaged in crop-livestock production 
whereas others may be peri-urban households. The 
mean landholding size was highest for households that 
had access to cooperative (1.41 ha) milk market outlet 
and lowest for households who had access to 
hotel/restaurant (0.48 ha) milk market outlet. The average 

 
 
 
distance travelled to the nearest urban milk market was 
highest to households who had access to cooperative 
(3.36 km) milk market outlet and lowest to households 
that had access to hotel/restaurant (1.8 km) milk market 
outlets. However, the average price offered by 

cooperative market outlet was 4.5
1
 birr which is lower 

than price offered by other market outlets.  
Proportion of household characteristics by milk market 

outlets is given in Table 2. About 29, 46 and 31% of 
households that had access to individual consumer, 
cooperative and hotel/restaurant milk market outlets, 
respectively had at least a child under the age of six. 
About 60, 54 and 69% of household heads who had 
access to individual consumer, cooperative and 
hotel/restaurant milk market outlets, respectively attended 
formal schooling. 75, 78 and 77% of households that had 
access to individual consumer, cooperative and 
hotel/restaurant milk market outlets, respectively were 
headed by male. About 31, 50 and 40% of households 
who had access to individual consumer, cooperative and 
hotel/restaurant milk market outlets, respectively 
accessed dairy extension services.  

About 76, 85 and 81% of households that had access 
to individual consumer, cooperative and hotel/restaurant 
milk market outlets, respectively accessed milk market 
information services. Households that had access to 
cooperative milk market outlet received relatively better of 
the service than others because cooperative were 
established by government. This was because they were 
given due attention by government extension services to 
ensure quality supply, support processing and to access 
better markets as compared to other outlets. Households 
who had access to cooperative milk market outlet replied 
that they did not have any other options as they are far 
from accessing urban market. About 43, 42 and 17% of 
households that had access to individual consumer, 
hotel/restaurant and cooperative milk market outlet, 
respectively received payment to their sales in cash. 
 
 
1
 US$ 1 = Birr 13.632 during the survey period. Birr is the currency unit 

of Ethiopia. 

027       Afr. J. Agric. Mark. 



      
 

Table 2. Proportion of household characteristics by milk market outlets   
 

      
 

 
Variable 

 
Category 

Proportion (%)  
 

  

Individual consumer (N=118) Cooperative (N=46) Hotels (N=118)  

    
 

 
Sex of household head 

Male 75 78 77 
 

 
Female 25 22 23  

   
 

 
Education level of head 

Formal 60 54 69 
 

 
Otherwise 40 46 31  

   
 

 Presence of at least a child under 6 Yes 29 46 31 
 

 years  No 71 54 69 
 

 
Mode of payment 

Cash 43 17 42 
 

 
Others 57 83 58  

   
 

 
Membership to cooperative 

Yes 15 85 25 
 

 
No 85 15 75  

   
 

 
Access to market information 

Yes 76 85 81 
 

 
No 24 15 19  

   
 

 
Access to dairy extension services 

Yes 31 50 40 
 

 

No 69 50 60  

   
  

Source: Authors collection, July and August 2010. 
 
 
 
About 85% of households who had access to cooperative 
market milk outlet were cooperative members. All the 
households that had access to cooperative milk market 
outlet replied that they had not received payment for 
sales made for two months before data collection. 
 
 
Factors affecting milk market outlet choices 
 
The multinomial logit model has been estimated by the 
maximum likelihood method. The overall model was 
significant at 0.01 significance level indicating 99% 
confidence level that the explanatory variables included in 
the model assessed the effects on the odds of two market 
outlets versus sales to individual consumer as indicated 
by the log pseudo likelihood value of -198.34. Moreover, 
based on the pseudo R² of 0.314, the model appears to 
have a good fit to the data (Table 3).  

The results indicated that households were less likely to 
access cooperative and hotel/restaurant milk market 
outlets as compared to individual consumer milk market 
outlet. Although search, bargaining and delivery costs for 
access to individual consumer milk market outlet may be 
high, the preference for accessing it may be an indication 
of social values attached with. Out of 15 explanatory 
variables included in multinomial logit model, seven 
variables to cooperative milk market outlet and three 
variables to hotel/restaurant milk market outlet were 

 
 
 
found to affect milk market outlet choices as compared 
with accessing individual consumer milk market outlet.  

Compared to accessing individual consumer milk 
market outlet, the likelihood of accessing cooperative milk 
market outlet was lower among households who owned 
large number of cows, who considered price offered by 
cooperative lower than other market outlets and who 
wanted payment other than cash mode. Households that 
had access to cooperative milk market outlet received 
lower price per liter of milk and their mode of sales was 
not cash. On the other hand, the likelihood of accessing 
cooperative milk market outlet was higher for households 
who were cooperative members, who owned large 
landholding size, who had been in dairy farming for many 
years and who received better dairy extension services. 
These households responded that they bypassed access 
to relatively profitable market outlet (hotel/restaurant) 
because they considered the opportunity costs in terms of 
their labor time and transportation, compared to 
additional profit they could have obtained.  

Compared to accessing individual consumer milk 
market outlet, the likelihood of accessing hotel/restaurant 
milk market outlet was lower among households who 
were at farthest distance to the nearest urban center and 
higher among households who accessed better dairy 
extension services and who owned large number of dairy 
cows. Households who owned large number of dairy 
cows produced more milk and supplied milk to hotel/ 

   

Kuma  et al.              028 



029       Afr. J. Agric. Mark. 
 

 
 
Table 3. Results of Multinomial logit regression on milk market outlet choices. 
 
 Symbol Cooperative Marginal effect (Coop) Hotel Marginal effect (Hotel) 
 Constant 2.653(2.394) - 0.875(1.191) - 
 AGE -0.029(0.031) -0.002(0.002) 0.003(0.016) 0.001(0.004) 
 SEX -0.255(0.709) -0.003(0.054) -0. 079(0.334) -0.025(0.081) 
 EDU 1.071(0.653) 0.017(0.051) 0.257(0.317) 0.070(0.078) 
 HSIZE 0.033(0.148) -0.007(0.012) -0.072(0.080) -0.016(0.019) 
 CHILD -0.212(0.614) -0.010(0.041) 0.310(0.347) 0.083(0.083) 
 DIST -0.062(0.122) -0.010(0.011) -0.234(0.101)** -0.057(0.025) 
 COW -0.797(0.350)** -0.057(0.027) 0.208(0.108)* 0.050(0.025) 
 EXT 2.107(0.668)*** 0.202(0.116) 0.854(0.325)*** 0.210(0.075) 
 YIELD 0.063(0.042) 0.008(0.003) -0.025(0.015) -0.005(0.003) 
 EXP 0.096(0.034)*** 0.008(0.004) -0.006(0.017) -0.001(0.004) 
 INFO 0.569(0.863) 0.049(0.036) 0.265(0.338) 0.065(0.082) 
 LAND 0.658(0.231)*** 0.053(0.024) 0.052(0.132) 0.011(0.030) 
 PRICE -1.400(0.377)*** -0.084(0.037) -0.237(0.158) -0.056(0.036) 
 MEMB 4.000(0.727)*** 0.517(0.091) 0.422(0.375) 0.102(0.088) 
 PAY -2.039(0.821)** -0.101(0.039) 0.075(0.292) 0.015(0.072) 
 
Number of observation = 282; Wald Chi-Square (30) = 80.09; Log pseudo likelihood = -198.357***; Pseudo R square: = 0.314. 
Source: Authors collection, July and August 2010. ***, **, and * indicate the significance level of 1, 5 and 10%, respectively. 
Numbers in brackets indicate robust standard error. 

 
 

 
restaurant as they have capacity to absorb supplied milk. 
Households who are at farthest to access hotel/restaurant 
milk market considered transaction costs of travelling as 
a hindering factor and thus accessed neighborhood 
individual consumer milk market outlet. 

 
Milking cow ownership 
 
Number of milking cows owned by households negatively 
and significantly affected accessing cooperative milk 
market outlet as compared with accessing individual 
consumer milk market outlet. The marginal effect 
indicates that the likelihood of accessing cooperative milk 
market outlet decreases by 5.7% for an increase in 
ownership of milking cow by a TLU as compared with 
accessing individual consumer milk market outlet. 

 
Milk price by market outlets 
 
Price offered by milk market outlet per liter of milk 
significantly and negatively affected accessing 
cooperative milk market outlet as compared with 
accessing individual consumer milk market outlet. The 
marginal effect shows that the likelihood of accessing 
cooperative milk market outlet decreases by 8.4% for a 
birr increase per liter of milk as compared with accessing 
individual consumer milk market outlet. 
 
Access to dairy extension services 
 
Access to dairy extension services such as dairy  techno- 

 
 

 
logy, information, training, field days, field visits and field 
tours received by households positively and significantly 
affected accessing cooperative milk market outlet as 
compared with accessing individual consumer milk 
market outlet. The marginal effect shows that the 
likelihood of accessing cooperative milk market outlet 
increases by 20.2% as compared with accessing 
individual consumer milk market outlet for one more 
member access to dairy extension services. 
 
 
Dairy farming experiences 
 
Number of years a household has been in dairy farming 
positively and significantly affected accessing cooperative 
milk market outlet as compared with accessing individual 
consumer milk market outlet. The marginal effect 
indicates that the likelihood of accessing cooperative milk 
market outlet increases by 0.8% as compared with 
accessing individual consumer milk market outlet for an 
increase in dairy farming experiences by a year. 
 
 
Landholding size 
 
Landholding size of households positively and 
significantly affected accessing cooperative milk market 
outlet as compared with accessing individual consumer 
milk market outlet. The marginal effect of landholding size 
shows that the likelihood of accessing cooperative milk 
market outlet increases by 5.3% as compared with 
accessing individual consumer milk market for a hectare 



Kuma  et al.              030 
 
 

 
increase in landholding size. 
 
 
Cooperative membership 
 
Membership to cooperative positively and significantly 
affected accessing cooperative milk market outlet as 
compared with accessing individual consumer milk 
market outlet. The marginal effect indicates that the 
likelihood of accessing cooperative milk market outlet 
increases by 51.7% as compared with accessing 
individual consumer milk market outlet for an addition of a 
household who has membership to cooperative. 
 
 
Distance to the nearest urban center 
 
Distance to the nearest urban center negatively and 
significantly affected accessing hotel/restaurant milk 
market outlet as compared to accessing individual 
consumer milk market outlet. The marginal effect 
indicates that the likelihood of accessing hotel/restaurant 
milk market outlet decreases by 5.7% as compared with 
accessing individual consumer milk market outlet for a km 
distance away from the nearest urban center. 
 
 
Milking cow ownership 
 
Number of milking cows owned by a household positively 
and significantly affected accessing hotel/restaurant milk 
market outlet as compared with accessing individual 
consumer milk market outlet. The marginal effect 
indicates that the likelihood of accessing hotel/restaurant 
milk market outlet increases by 5% as compared with 
accessing individual consumer milk market outlet for an 
increase in milking cow ownership by one TLU. 
 
 
Access to dairy extension services 
 
Access to dairy extension services positively and 
significantly affected accessing hotel/restaurant milk 
market outlet as compared with accessing individual 
consumer milk market outlet. The marginal effect shows 
that the likelihood of accessing hotel/restaurant milk 
market outlet increases by 21% as compared with 
accessing individual consumer milk market outlet for an 
addition of a household who accessed dairy extension 
service. 
 
 
Conclusion 
 
The study was undertaken with the objective of assessing 
factors affecting milk market outlet choices in Wolaita 
zone, Ethiopia. Using farm household survey data from 
394 households and Multinomial Logit Model, milk market 

 
 
 

 
outlet choices were analyzed. Multinomial Logit model 
results indicate that compared to accessing individual 
consumer milk market outlet, the likelihood of accessing 
cooperative milk market outlet was lower among 
households who owned large number of cows, who 
considered price offered by cooperative lower than other 
market outlets and who wanted payment other than cash 
mode. The likelihood of accessing cooperative milk 
market outlet was higher for households who were 
cooperative members, who owned large landholding size, 
who had been in dairy farming for many years and who 
received better dairy extension services. Compared to 
accessing individual consumer milk market outlet, the 
likelihood of accessing hotel/restaurant milk market outlet 
was lower among households who were at far away from 
the nearest distance to the nearest urban center and 
higher among households who accessed better dairy 
extension services and who owned large number of dairy 
cows. As one of the key factor to boost milk market outlet 
choices, dairy extension services should be strengthened 
through redesigning or reforming implementation 
strategies or improving/strengthening existing policy. It 
should be strengthened to enable farmers produce 
surplus milk for markets and should devise means to 
reduce local milking cow numbers by replacing them with 
crossbred cows. Moreover, governments should 
strengthen milk processing cooperatives and improve 
their infrastructure facilities. 
 
 
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