This study investigates factors that influence the choice of marketing strategies among dairy farmers in Ethiopia. The farmers used three marketing strategies, namely, milk products marketing (26 per cent), raw milk marketing (59 per cent), and both milk products marketing and raw milk marketing (15 per cent). The results showed that the following factors influenced the probability of choosing a raw milk marketing strategy over milk products marketing: age of the household head, proportion of crossbreed cows owned, total milk produced, distance to the market, income per litre of milk, and cooperative membership. Further analysis revealed that dairy farmers are better off if they utilize the raw milk marketing strategy, which has higher returns. Farmers who relied only on milk products marketing had significantly lower dairy income. It is recommended that tailored efforts are channelled towards improving access to raw milk markets by establishing more milk collection points.

AGRA (2017) Africa Agriculture Status Report: The Business of Smallholder Agriculture in Sub-Saharan Africa (Issue 5), Alliance for a Green Revolution in Africa (AGRA), Nairobi, Kenya.

Ahmed, M.A.M., Ehui, S. and Assefa, Y. (2004) Dairy Development in Ethiopia, EPTD Discussion Paper No. 123, International Food Policy Research Institute, Washington, DC.

Brar, R.S., Kaur, I., Singh, V.P. and Chopra, S. (2018) ‘Analysis of factors influencing choice of milk marketing channel among small and medium dairy farmers in Punjab’, Indian Journal of Dairy Science 71(3): 299–305.

Chagwiza, C., Muradian, R. and Ruben, R. (2016) ‘Cooperative membership and dairy performance among smallholders in Ethiopia’, Food Policy 59: 165–73 <https://doi.org/10.1016/j.foodpol.2016.01.008>.

Daidone, S., Rossi, N.W. and Soares, F.V. (2018) ‘Synergies between social protection and agriculture’, in F. Wouterse and A.S. Taffesse (eds), Boosting Growth to End Hunger by 2025: The Role of Social Protection, ReSAKSS Annual Trends and Outlook Report 2017–2018, International Food Policy Research Institute, Washington, DC.

De Janvry, A., Fafchamps, M. and Sadoulet, E. (1991) ‘Peasant household behavior with missing markets: some paradoxes explained’, Economic Journal 101(409): 1400–17.

Dessie, A.B., Abate, T.M. and Mekie, T.M. (2018) ‘Factors affecting market outlet choice of wheat producers in North Gondar Zone, Ethiopia’, Agriculture & Food Security 7: 91 <https://doi.org/10.1186/s40066-018-0241-x>.

Ethiopian Embassy (2018) ‘Ethiopia: land of lucrative dairy investment and trade opportunities’, [online] <https://ethiopianembassy.be/2018/05/11/ethiopia-land-of-lucrative-dairy-investment-and-trade-opportunities/> [accessed 22 September 2019].

Field, A.P. (2009) Discovering Statistics Using SPSS, 3rd edn, Sage, London.

Gujarati, D. (2004) Basic Econometrics, 4th edn, McGraw-Hill, New York.

Hao, J., Bijman, J., Gardebroek, C., Heerink, N., Heijman, W. and Huo, X. (2018) ‘Cooperative membership and farmers’ choice of marketing channels: evidence from apple farmers in Shaanxi and Shandong Provinces, China’, Food Policy 74: 53–64 <http://dx.doi.org/10.1016/j.foodpol.2017.11.004>.

Holloway, G., Nicholson, C., Delgado, C., Staal, S. and Ehui, S. (2000) ‘Agroindustrialization through institutional innovation transaction costs, cooperatives and milk-market development in the east-African Highlands’, Agricultural Economics 23: 279–88 <https://doi.org/10.1111/j.1574-0862.2000.tb00279.x>.

Jagwe, J.N. and Machethe, C.L. (2011) ‘Effects of transaction costs on choice of selling point: a case of smallholder banana growers in the Great Lakes Region of Central Africa’, Agrekon 50(3): 109–23 <http://dx.doi.org/10.1080/03031853.2011.617866>.

Kihoro, E.M., Irungu, P., Nyikal, R. and Maina, I.N. (2016) ‘An analysis of factors influencing farmers’ choice of green gram marketing channels in Mbeere south sub-county, Kenya’, invited poster presented at the 5th International Conference of the African Association of Agricultural Economists, 23–26 September 2016, Addis Ababa, Ethiopia.

Kumar, A., Staal, S.J. and Singh, D.K. (2011) ‘Smallholder dairy farmers’ access to modern milk marketing chains in India’, Agricultural Economics Research Review 24: 243–53.

Lenjiso, B.M., Smits, J. and Ruben, R. (2016) ‘Smallholder milk market participation and intra-household time allocation in Ethiopia’, European Journal of Development Research 28: 808–25 <https://doi.org/10.1057/ejdr.2015.54>.

Mabuza, M.L., Ortmann, G. and Wale, E. (2014) ‘Effects of transaction costs on mushroom producers’ choice of marketing channels: implications for agricultural market access in Swaziland’, South African Journal of Economic and Management Sciences 17(2): 1–13 <http://dx.doi.org/10.4102/sajems.v17i2.494>.

Machethe, C.L. (2004) ‘Agriculture and poverty in South Africa: can agriculture reduce poverty?’ paper presented at the Overcoming Underdevelopment Conference, Pretoria, Citeseer.

Makhura, M.T. (2001) ‘Overcoming transaction costs barriers to market participation of smallholder farmers in the Northern Province of South Africa’, unpublished PhD thesis, University of Pretoria.

Mellor, J.W. (2017) Agricultural Development and Economic Transformation: Promoting Growth with Poverty Reduction, Palgrave Macmillan, New York.

Mmbando, F.E., Wale, E., Baiyegunhi, L.I.S. and Darroch, M.A.G. (2016) ‘The choice of marketing channel by maize and pigeonpea smallholder farmers: evidence from the northern and eastern zones of Tanzania’, Agrekon 55(3): 254–77 <http://dx.doi.org/10.1080/03031853.2016.1203803>.

Musara, J.P., Musemwa, L., Mutenje, M., Mushunje, A. and Pfukwa, C. (2018) ‘Market participation and marketing channel preferences by small scale sorghum farmers in semi-arid Zimbabwe’, Agrekon 57: 64–77 <http://dx.doi.org/10.1080/03031853.2018.1454334>.

Tarekegn, K., Haji, J. and Tegegne, B. (2017) ‘Determinants of honey producer market outlet choice in Chena District, southern Ethiopia: a multivariate probit regression analysis’, Agricultural and Food Economics 5: 20 <http://dx.doi.org/10.1186/s40100-017-0090-0>.

Teklewold, H. (2016) On the Joint Estimation of Technology Adoption and Market Participation under Transaction Costs in Smallholder Dairying in Ethiopia [online], Discussion Paper Series EfD DP 16-04, Environment for Development Initiative <www.jstor.org/stable/resrep15041> [accessed 11 July 2020].

USAID (2019) ‘Agriculture and food security’ [online] <https://www.usaid.gov/southern-africa-regional/agriculture-and-food-security> [accessed 27 March 2019].

Wouterse, F. and Taffesse, A.S. (2018) Boosting Growth to End Hunger by 2025: The Role of Social Protection, ReSAKSS Annual Trends and Outlook Report 2017–2018, International Food Policy Research Institute, Washington, DC.

Xaba, B.G. and Masuku, M.B. (2013) ‘Factors affecting the choice of marketing channel by vegetable farmers in Swaziland’, Sustainable Agriculture Research 2(1): 112–23 <http://dx.doi.org/10.22004/ag.econ.231341>.

Zuniga-Arias, G.E. (2007) Quality Management and Strategic Alliances in the Mango Supply Chain from Costa Rica: An Interdisciplinary Approach for Analyzing Coordination, Incentives and Governance, International Chains and Networks Series Volume 3, Wageningen Academic Publishers, The Netherlands.

AGRA (2017) Africa Agriculture Status Report: The Business of Smallholder Agriculture in Sub-Saharan Africa (Issue 5), Alliance for a Green Revolution in Africa (AGRA), Nairobi, Kenya.

Ahmed, M.A.M., Ehui, S. and Assefa, Y. (2004) Dairy Development in Ethiopia, EPTD Discussion Paper No. 123, International Food Policy Research Institute, Washington, DC.

Brar, R.S., Kaur, I., Singh, V.P. and Chopra, S. (2018) ‘Analysis of factors influencing choice of milk marketing channel among small and medium dairy farmers in Punjab’, Indian Journal of Dairy Science 71(3): 299–305.

Chagwiza, C., Muradian, R. and Ruben, R. (2016) ‘Cooperative membership and dairy performance among smallholders in Ethiopia’, Food Policy 59: 165–73 <https://doi.org/10.1016/j.foodpol.2016.01.008>.

Daidone, S., Rossi, N.W. and Soares, F.V. (2018) ‘Synergies between social protection and agriculture’, in F. Wouterse and A.S. Taffesse (eds), Boosting Growth to End Hunger by 2025: The Role of Social Protection, ReSAKSS Annual Trends and Outlook Report 2017–2018, International Food Policy Research Institute, Washington, DC.

De Janvry, A., Fafchamps, M. and Sadoulet, E. (1991) ‘Peasant household behavior with missing markets: some paradoxes explained’, Economic Journal 101(409): 1400–17.

Dessie, A.B., Abate, T.M. and Mekie, T.M. (2018) ‘Factors affecting market outlet choice of wheat producers in North Gondar Zone, Ethiopia’, Agriculture & Food Security 7: 91 <https://doi.org/10.1186/s40066-018-0241-x>.

Ethiopian Embassy (2018) ‘Ethiopia: land of lucrative dairy investment and trade opportunities’, [online] <https://ethiopianembassy.be/2018/05/11/ethiopia-land-of-lucrative-dairy-investment-and-trade-opportunities/> [accessed 22 September 2019].

Field, A.P. (2009) Discovering Statistics Using SPSS, 3rd edn, Sage, London.

Gujarati, D. (2004) Basic Econometrics, 4th edn, McGraw-Hill, New York.

Hao, J., Bijman, J., Gardebroek, C., Heerink, N., Heijman, W. and Huo, X. (2018) ‘Cooperative membership and farmers’ choice of marketing channels: evidence from apple farmers in Shaanxi and Shandong Provinces, China’, Food Policy 74: 53–64 <http://dx.doi.org/10.1016/j.foodpol.2017.11.004>.

Holloway, G., Nicholson, C., Delgado, C., Staal, S. and Ehui, S. (2000) ‘Agroindustrialization through institutional innovation transaction costs, cooperatives and milk-market development in the east-African Highlands’, Agricultural Economics 23: 279–88 <https://doi.org/10.1111/j.1574-0862.2000.tb00279.x>.

Jagwe, J.N. and Machethe, C.L. (2011) ‘Effects of transaction costs on choice of selling point: a case of smallholder banana growers in the Great Lakes Region of Central Africa’, Agrekon 50(3): 109–23 <http://dx.doi.org/10.1080/03031853.2011.617866>.

Kihoro, E.M., Irungu, P., Nyikal, R. and Maina, I.N. (2016) ‘An analysis of factors influencing farmers’ choice of green gram marketing channels in Mbeere south sub-county, Kenya’, invited poster presented at the 5th International Conference of the African Association of Agricultural Economists, 23–26 September 2016, Addis Ababa, Ethiopia.

Kumar, A., Staal, S.J. and Singh, D.K. (2011) ‘Smallholder dairy farmers’ access to modern milk marketing chains in India’, Agricultural Economics Research Review 24: 243–53.

Lenjiso, B.M., Smits, J. and Ruben, R. (2016) ‘Smallholder milk market participation and intra-household time allocation in Ethiopia’, European Journal of Development Research 28: 808–25 <https://doi.org/10.1057/ejdr.2015.54>.

Mabuza, M.L., Ortmann, G. and Wale, E. (2014) ‘Effects of transaction costs on mushroom producers’ choice of marketing channels: implications for agricultural market access in Swaziland’, South African Journal of Economic and Management Sciences 17(2): 1–13 <http://dx.doi.org/10.4102/sajems.v17i2.494>.

Machethe, C.L. (2004) ‘Agriculture and poverty in South Africa: can agriculture reduce poverty?’ paper presented at the Overcoming Underdevelopment Conference, Pretoria, Citeseer.

Makhura, M.T. (2001) ‘Overcoming transaction costs barriers to market participation of smallholder farmers in the Northern Province of South Africa’, unpublished PhD thesis, University of Pretoria.

Mellor, J.W. (2017) Agricultural Development and Economic Transformation: Promoting Growth with Poverty Reduction, Palgrave Macmillan, New York.

Mmbando, F.E., Wale, E., Baiyegunhi, L.I.S. and Darroch, M.A.G. (2016) ‘The choice of marketing channel by maize and pigeonpea smallholder farmers: evidence from the northern and eastern zones of Tanzania’, Agrekon 55(3): 254–77 <http://dx.doi.org/10.1080/03031853.2016.1203803>.

Musara, J.P., Musemwa, L., Mutenje, M., Mushunje, A. and Pfukwa, C. (2018) ‘Market participation and marketing channel preferences by small scale sorghum farmers in semi-arid Zimbabwe’, Agrekon 57: 64–77 <http://dx.doi.org/10.1080/03031853.2018.1454334>.

Tarekegn, K., Haji, J. and Tegegne, B. (2017) ‘Determinants of honey producer market outlet choice in Chena District, southern Ethiopia: a multivariate probit regression analysis’, Agricultural and Food Economics 5: 20 <http://dx.doi.org/10.1186/s40100-017-0090-0>.

Teklewold, H. (2016) On the Joint Estimation of Technology Adoption and Market Participation under Transaction Costs in Smallholder Dairying in Ethiopia [online], Discussion Paper Series EfD DP 16-04, Environment for Development Initiative <www.jstor.org/stable/resrep15041> [accessed 11 July 2020].

USAID (2019) ‘Agriculture and food security’ [online] <https://www.usaid.gov/southern-africa-regional/agriculture-and-food-security> [accessed 27 March 2019].

Wouterse, F. and Taffesse, A.S. (2018) Boosting Growth to End Hunger by 2025: The Role of Social Protection, ReSAKSS Annual Trends and Outlook Report 2017–2018, International Food Policy Research Institute, Washington, DC.

Xaba, B.G. and Masuku, M.B. (2013) ‘Factors affecting the choice of marketing channel by vegetable farmers in Swaziland’, Sustainable Agriculture Research 2(1): 112–23 <http://dx.doi.org/10.22004/ag.econ.231341>.

Zuniga-Arias, G.E. (2007) Quality Management and Strategic Alliances in the Mango Supply Chain from Costa Rica: An Interdisciplinary Approach for Analyzing Coordination, Incentives and Governance, International Chains and Networks Series Volume 3, Wageningen Academic Publishers, The Netherlands.