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Despite the importance of formalization of milk market in Rwanda, the majority of dairy farmers are continuing to choose to market their milk using informal channels at 63% at country level. Farmers are obviously supposed to be rational in their decision making but it is not clear what drives farmer decision of the channel to sell to. This study investigated institutional factors affecting farmer’s choice of milk marketing channel in Nyabihu District, Western Province of Rwanda. Multistage sampling techniques were employed to select respondents. Data was drawn from 96 respondents using structured questionnaires. Multinomial Logit regression model was employed to estimate the data. The results from the model show that form of payment (P≤0.01) influenced negatively the choice of local vendors marketing channel over brokers channel and contract farming (P≤0.01) greatly influenced positively the choice of local vendors marketing channel over brokers channel. One the side The results indicated that form of payments(P≤0.05), access to market information(P≤0.10) affect negatively the probability of choosing milk collection centers marketing channel over brokers channel and access to credit(P≤0.01), awareness of milk quality (P≤0.01)and contract farming (P≤0.01) are positively influenced the choice of milk collection centers compared to brokers channel. Further the study recommends government funding to be increased to make those institutions more active so that it can facilitate in providing trainings and the right information to dairy farmers. Provision of non-price incentives and promoting transparency and accountability in the governance of milk collection centers and dairy cooperatives are to be reinforced in order to attract more farmers in formal value chain. Lastly, a broader study to cover more districts in Rwanda can be conducted to confirm whether the same results apply.

Analysis of Institutional factors Influencing Farmer’s Choice of Milk Marketing Channel in Rwanda