Further, because the informal market often does not incur those costs, the market margins between farmer and consumer are usually smaller. This usually means that the informal market can offer higher prices to farmers, and lower retail prices to consumers. It is clear that informal retail sales to hotels, restaurants and homes pay the highest prices, a pattern seen in other country cases as well. Cooperatives and traders seem to operate in about the same price range, and differences between them may be related to the types of services provided and the mode of payment. They may value this service enough to accept lower prices.
Some traders also offer loans and provide feed delivery.
Retail sales to homes and restaurant may attract high prices, but require extra effort by the farmer in terms of finding buyers and delivery. This combination of prices, effort required to market, and services offered in return, will determine farmer loyalty to a milk producer organisation, compared to choosing to turn instead to an informal milk outlet. There are other constraints to milk producer organisations besides marketing These relate to institutional issues, most of which are well documented. One is the fact that public support of some kind may be necessary to establish milk producer groups, if farmers resources are not enough. Again, the Amul and Operation Flood examples are illustrative of this.