This article analyzes how rural territories anchored by secondary/tertiary cities, denominated rural-urban territories (RUT) in the Southwest part of Colombia introduce spatial and territorial heterogeneity in the participation of farmers in restructured dairy value chains. We look at how different sized RUTs (with an urban center between 15k-400k inhabitants) affect farmer participation in modern market channels (such as large milk processors) as well as the transitional market channel (informal traders) on two different time periods (2008-2012 and 2013-2018). All while controlling for farmer micro characteristics, as well as the level of rural territorial development (degree of violence, density of infrastructure, and urban proximity) and geographical differences. Using a panel multinomial logit approach, we are able to find that urban size effects are positively significant in the probability of selling to both market channels. Even so, other territorial characteristics such as violence levels are key in modern market participation. Additionally, we are able to find that agglomeration effects are evident but vary by market channel. We see that higher agglomeration levels have a significant effect (negative effect) on the odds of selling to the transitional market but are less significant on the odds of selling to the modern channel. As fewer farmers have access to modern chains in developing countries, measures to make value chains more inclusive to remote farmers can benefit them and the performance of the dairy sector in Colombia.
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