Exploring Institutional Dynamics in Milk Marketing: A Case Study of Eastern Tigray, Ethiopia

Institutional set-up assists and facilitates transaction of products especially like milk that need immediate exchange due to easily spoilage nature. Studies focusing on institutional analysis in dairy marketing have not been done in the study area so far. Thus, this study was conducted to analyze the institutional set-up of milk marketing in WukroKilteawlalo, Tigray. Primary data were collected using a structured questionnaire from samples selected through a two-stage random sampling technique. Descriptive statistics and an econometric model were used to analyze the data. In the probit model, the amount of milk produced per day and membership in a milk cooperative increase the likelihood of using a contract, whereas age, non-farm income, and market distance decrease the probability of dairy producers using contract sales. The study has also revealed that due to lack functioning of formal institutions, the informal institution dominant in the dairy marketing. Institutional, production and marketing challenges for dairy marketing were identified. Thus, besides focusing on important significant variables in the results, policy makers should focus on devising appropriate dairy marketing policies, regulations, and rules. In addition to this, set up cooperatives and milk processor plants and link producers using contract sale.