The focus of this paper is on milk producer organisations in developing countries, particularly those serving smallholder dairy farmers. The main part of the paper presents some basic principles that seem to govern market opportunities for milk producer organisations. Milk market opportunities and milk producer organisation formation are treated as two aspects of the same issue. Illustrations of these are given from cases in several countries, based on the authors experiences. A small addendum is presented that addresses the important role of the informal market in most developing countries, again with examples from different countries.
Milk is perishable and requires special handling to insure quality and shelf life.
Unlike grain, which can be purchased in small quantities, and gradually bulked by a market agent over days or weeks before delivery to the next market point, milk must be collected and transported quickly. Holding milk, particularly in rural developing country settings where infrastructure may be lacking, can be costly and risky. The practical collection and transport of milk to market therefore usually requires some bulking, and the need for speed and reliability requires good organisation of that bulking. It may be noted that, in the case of milk, bargaining power to improve prices may not be as important a reason for group formation as these others simply having a reliable market mechanism may be more important, and in many cases farmers are willing to accept lower prices in return. Market opportunities are thus central to dairy farmer group formation and the two issues share some basic underlying features.