Smallholder dairy farmers’ milk marketing participation decision in North Mecha District, Ethiopia: a Heckman two-stage analysis

Abstract

Smallholder dairy farmers in North Mecha District, Ethiopia, face persistent market exclusion partly attributable to limited access to institutional services and physical market infrastructure. Despite growing empirical evidence on dairy market participation in Ethiopia, the joint determinants of the participation decision and the volume of milk supplied in peri-urban high-potential zones such as North Mecha District remain underexplored. This study aims to analyze the determinants of smallholder dairy farmers’ milk marketing participation decision and the volume of milk supplied to the market. Data were collected from 186 smallholder farmers through a multistage sampling approach and analyzed using the Heckman two-stage model to correct for selection bias. The first-stage probit model revealed that farmland size, education level (years of schooling), age of the household head (negatively), distance to market (negatively), cooperative membership, access to improved forage, and access to veterinary services significantly influenced milk marketing participation. The second-stage OLS model shows that farmland size, livestock ownership, market distance(negatively), cooperative membership, and access to improved forage and veterinary services influence the quantity of milk supplied to the market. The positive and significant Inverse Mills Ratio (IMR) confirmed the presence of sample selection bias, validating the Heckman two stage approach. The findings highlight the need to strengthen institutional support, improve access to extension and animal health services, and promote cooperative membership. Targeted policy interventions including improved feed availability, quality animal health services, enhanced crossbreeding programs, and market infrastructure development are recommended to boost dairy productivity and milk marketing participation in the district.