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Milk Marketing Pathways, Producer Share and Market Constraints among Dairy Farmers in Assam: Evidence from Golaghat District

Based on primary data from 200 dairy farmers in Golaghat, Assam, this study reveals that while direct sales dominate milk marketing channels and yield the highest producer share, the sector is constrained by weak infrastructure and perishability, necessitating strengthened cooperative governance and cold-chain facilities to improve farmer welfare.

Original authors: Devojit Phukan¹, Biswajyoti Sarmah², Hemanta Saikia, Debajani Boruah

Published 2026-07-02

📖 5 min read🧠 Deep dive

CC BY 4.0

Original authors: Devojit Phukan¹, Biswajyoti Sarmah², Hemanta Saikia, Debajani Boruah

Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). ✨ This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer

Imagine the dairy farmers in Golaghat, Assam, as small-scale bakers in a bustling village. They bake fresh "loaves" (milk) every day, but they face a tricky problem: how to sell their fresh bread before it goes stale. Unlike bread, milk spoils very quickly, so these farmers can't wait around for a buyer; they need to move their product fast.

This study acts like a detective report, interviewing 200 of these "bakers" to figure out who buys their milk, how much money they actually keep, and what headaches they face along the way.

Here is the story of their findings, broken down simply:

1. The Four "Sales Routes"

The researchers found that farmers use four main paths to get their milk from the farm to the customer's glass. Think of these as different delivery routes:

The Direct Route (The Farmer's Stand): The farmer sells directly to the neighbor or customer. This is the most popular path (used by nearly half the farmers). It's like setting up a lemonade stand right in your driveway.
The Vendor Route (The Middleman): The farmer sells to a local milkman (vendor) who then delivers to customers.
The Shopkeeper Route: The farmer sells to a local shop owner who resells it.
The Cooperative Route (The Big Club): The farmer sells to a large dairy organization (cooperative) which then sells to retailers.

The Big Twist: The route you take depends entirely on how much milk you make.

Small Bakers (Small Farms): They make just enough milk for their own family and a little extra. Because they have a small "surplus," they can easily walk their milk to a neighbor's door. 84% of them use the Direct Route.
Big Bakers (Large Farms): They produce massive amounts of milk every day. They can't possibly walk that much milk to individual neighbors. They need a truck or a big buyer to take it all away at once. So, they are forced to use the Vendor, Shopkeeper, or Cooperative routes, even though these routes take a bigger cut of their money.

2. The "Wallet" Test: Who Keeps the Money?

The study looked at the price of a liter of milk. Let's say the customer pays ₹55 (about $0.65). How much of that ₹55 actually ends up in the farmer's pocket?

Direct Route: The farmer keeps 100% (₹55). No one else takes a slice of the pie.
Vendor Route: The farmer keeps 90% (₹49.50). The vendor takes a small slice for their delivery service.
Shopkeeper Route: The farmer keeps 88% (₹48.45).
Cooperative Route: The farmer keeps only 81.8% (₹45). This is the biggest slice taken by the middlemen.

The Lesson: While selling directly is the most profitable, it's like trying to sell a whole truckload of bread from your driveway—it's impossible if you have too much bread. Big farmers are forced to accept a smaller share of the profit just to get their milk sold quickly.

3. The "Traffic Jams" (Constraints)

Even though the farmers have these routes, the roads are full of potholes. The study identified several major headaches:

The Waiting Game (Delayed Payment): About 13.5% of farmers said they don't get paid immediately. For big farmers, waiting for money is like having a truck full of fresh bread sitting in traffic while it goes stale.
The Long Walk (Transportation): Nearly half the farmers struggle with the cost and hassle of getting their milk to the buyer.
The "No-Fridge" Problem: The study found that very few farmers complained about "storage problems." However, the researchers explain this isn't because they have great fridges. It's because they are forced to sell immediately to avoid spoilage. They don't have the luxury of storing milk; they have to sell it the moment it's produced.
The Time Crunch: Small farmers can sell their milk in under an hour. But for the "Big Bakers," it can take over three hours just to find a buyer for their huge volume.

4. What Should Be Done? (The Recipe for Improvement)

The authors suggest that the current system is like a bicycle with a flat tire. To fix it, they propose four specific repairs:

Build More "Collection Hubs": Create small, local collection centers in villages so farmers don't have to rely on just one vendor or shopkeeper.
Fix the Cooperatives: The big dairy clubs (cooperatives) need to be more transparent and pay farmers faster and better, so farmers don't feel forced to sell to the lowest bidder.
Add "Cooling Stations": Build small, local refrigeration units (cold chains). If farmers could keep milk fresh for a few hours, they could wait for a better price instead of selling in a panic.
Share the News: Give farmers a way to know the current market prices so they aren't taken advantage of by middlemen.

The Bottom Line

The study concludes that while small farmers in Assam are doing okay by selling directly to neighbors, the system is broken for larger farms. They are producing more but keeping less of the profit because the "roads" to the market are inefficient. To help these farmers, we don't just need more milk; we need better roads, better payment systems, and better storage so that the "bakers" can keep more of the money they earn.

Technical Summary: Milk Marketing Pathways, Producer Share, and Market Constraints in Assam

Problem Statement
While dairy farming serves as a critical source of livelihood diversification for rural households in Assam, the sector remains characterized by weak integration with organized procurement and processing systems. Unlike other parts of India where Operation Flood established robust cooperative networks, the northeastern region, including Assam, faces persistent gaps in productivity, cold-chain infrastructure, and market integration. Milk, being a highly perishable commodity, requires rapid disposal to prevent quality deterioration and income loss. However, empirical evidence regarding specific marketing pathways, the distribution of producer share in consumer prices, and the nature of market constraints—particularly differentiated by farm size—remains limited in Upper Assam. This study addresses this gap by focusing on the Golaghat district, aiming to understand how marketing behavior, channel choice, and economic returns vary across different scales of dairy operations.

Methodology
The research employed a cross-sectional design based on primary data collected from 200 dairy farmers in the Golaghat district of Assam. A multistage random sampling technique was utilized to select respondents from four development blocks: Golaghat South, Golaghat East, Morangi, and Gomariguri. Within each block, 50 farmers were surveyed.

Respondents were categorized into four farm-size groups based on herd size:

Small: 1–3 cattle
Medium: 4–6 cattle
Large: 7–9 cattle
Very Large: 10+ cattle

Data collection involved a structured interview schedule covering socio-economic characteristics, herd management, milk production, home consumption, marketable surplus, marketing channels, pricing (producer and consumer), payment patterns, and marketing constraints.

The analytical framework utilized descriptive statistics, frequency distributions, and comparative analysis. Key metrics included:

Marketable Surplus: Calculated as total daily production minus household consumption.
Producer Share (PS): Computed using the formula $PS = (P_F / P_C) \times 100$ , where $P_F$ is the producer price and $P_C$ is the consumer price.
Intermediary Margin: The difference between consumer and producer prices.
Income Analysis: Annual net income per crossbreed cattle was estimated across different channels and farm sizes.

Key Contributions and Findings

1. Marketable Surplus and Commercial Orientation
The study found a positive correlation between farm size and commercial orientation. While small farms marketed 90.03% of their production, larger farms marketed significantly higher proportions: 96.77% (medium), 97.79% (large), and 98.53% (very large). This indicates that as production scales up, the proportion of milk retained for household consumption decreases, increasing reliance on external markets.

2. Marketing Pathways and Farm Size
Four distinct marketing pathways were identified:

Producer $\to$ Consumer (Direct)
Producer $\to$ Vendor $\to$ Consumer
Producer $\to$ Shopkeeper $\to$ Consumer
Producer $\to$ Cooperative $\to$ Retailer $\to$ Consumer

Direct sales were the dominant channel overall, utilized by 47.5% of the sample. However, channel choice was highly sensitive to farm size:

Small farms: 83.78% relied on direct sales.
Medium farms: 54.28% used direct sales; 29.50% used vendor-based channels.
Large and Very Large farms: Direct sales dropped to 14.70% and 8.33%, respectively. These larger operations shifted toward intermediary (vendor/shopkeeper) and cooperative-linked channels to manage the logistical challenge of disposing of higher daily volumes.

3. Producer Share and Economic Returns
The analysis of producer share revealed a clear inverse relationship between channel length and producer return. With a uniform consumer price of Rs. 55/litre across channels:

Direct Channel: 100% producer share (Rs. 55.00).
Vendor Channel: 90.00% share (Rs. 49.50).
Shopkeeper Channel: 88.09% share (Rs. 48.45).
Cooperative-Retailer Channel: 81.82% share (Rs. 45.00).

Consequently, annual net income per crossbreed cattle was highest under direct marketing and lowest under the cooperative-retailer pathway. For instance, medium farms earned Rs. 92,925.35 annually via direct sales compared to Rs. 59,860.00 via cooperative channels.

4. Market Constraints
The study identified several structural constraints affecting the dairy economy in Golaghat:

Payment Issues: 27.5% of farmers relied solely on credit sales, and 13.5% reported delayed payments, an issue that intensified with farm size.
Logistics: Transportation costs affected 49.5% of farmers (moderately to highly).
Disposal Time: While 39.0% of farmers disposed of milk within one hour, very large farms faced significant delays, with 41.67% requiring more than three hours for disposal.
Infrastructure: Although only 3.5% explicitly reported storage problems, the authors interpret this as a sign of "distress-driven quick disposal" rather than adequate cold-chain infrastructure.
Competition: 26.5% reported high competition from organized milk markets.

Significance and Policy Implications
The paper posits that the dairy marketing structure in Golaghat is shaped by a trade-off between price realization and market access security. While direct marketing offers the highest producer share, it is not scalable for larger farms that require assured disposal mechanisms. Conversely, the existing cooperative and intermediary channels, while offering volume absorption, currently provide lower producer shares and suffer from issues like delayed payments and weak bargaining power.

The study concludes that improving the dairy economy in Assam requires more than just increasing production. It necessitates a differentiated policy approach:

For Small Farmers: Support for aggregation, local marketing, and payment security.
For Medium and Large Farmers: Assured procurement, transport support, and chilling facilities.

Specific recommendations include expanding village-level collection centers, strengthening cooperative governance through transparent pricing and timely payments, promoting small-scale cold-chain facilities to reduce distress sales, and implementing market information systems. The authors emphasize that these interventions are essential to enhance producer welfare and support sustainable commercialization in Northeast India's dairy sector.