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Dairy Cooperatives are an important component of organized milk markets in India. However, despite a considerable horizontal expansion of Dairy Cooperative Societies no significant changes have occurred in the average size and scale of a village level dairy Cooperative. The present study aims to provide suggestions to planners and policy makers towards enhancing the performance of cooperatives in an underdeveloped production environment of India which has not realized the beneficial effects of the dairy cooperative movement to the desired extent. The study focuses on the micro-environment within which households function and take their decisions in regard to proportion of production that is to be sold in market; their choice of marketing channels and factors driving such choice. It also documents the household-level impact that cooperatives have had in terms of increasing efficiency in production and intensity of market participation; assesses whether such impacts have been heterogeneous across different scales of production and examines the extent of inclusiveness of smallholders when it comes to linking farmers to market.