Determinants of dairy farmers’ choice of marketing channels in Bihar, India

Abstract

In the past one and half decade, milk production in Bihar has increased substantially, from 2.7 million tons in 2001-02 to 8.7 million tons in 2016-17 lifting the per capita daily milk availability in the state from 88g to 228g. However, dairy sector is dominated by small farmers, and because of their small scale they are forced to sell milk to informal buyers who often exploit them by paying less than the market price. This paper analyses farmers’ sale pattern of milk and identifies factors influencing their choice of market channels. Results indicate that small farmers prefer selling milk directly to consumers because of the higher offer prices and nearness to the production centres. Large and educated farmers sell to formal buyers. However, if the payments from formal buyers are delayed, farmers tend to switch over to informal buyers. The likelihood of selling to informal buyers increases if farmers find it difficult to sell directly to the consumers located far away from the production centres.