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The integrated food supply chains have emerged as the fastest growing and widely visible market phenomenon. Yet in most developing countries, small scale milk market agents and chains supplying fresh milk and traditionally processing dairy products play a major role. They are the key outlets for small holder dairy producers and are the main source of fresh milk supply for consumers. These traditional small-scale markets account for over 80 per cent of the marketed milk in many countries in South Asia, sub-Saharan Africa and Latin America (Omore et al., 2004). In India too, more than 80 per cent of milk marketed still passes through these traditional milk marketing channels (Steven et al., 2008). The much hyped co-operative dairy development in India has also not been able to significantly affect the dominance of these traditional milk marketing channels. But, the functioning of the traditional milk market and its potential in income and employment generation has not been conceived properly in India. The understanding of the traditional milk marketing and processing chains are helpful in evolving policies and developmental strategies for creating an efficient milk marketing system. A study was planned in one of the backward states of India, namely Assam. In this state, 97 per cent of milk marketing is controlled by traditional milk market agents. (Kumar et al., 2007; Sirohi et al., 2009). The organised marketing and processing of milk in Assam remains insignificant. Formal milk pasteurisation and dairy product processing channels, both under co-operative and private sectors, account for hardly 3 per cent of the total locally marketed milk. The …