Dairy marketing cooperatives are one type of agricultural cooperatives in which milk producer farmers come together to sell their products where there is market, and access services which is not easily accessible individually. Promoting these cooperatives, as a means of linking smallholders to markets, is a key pillar of Ethiopia’s rural development strategy. They are the newly emerging marketing outlet for Ethiopian smallholder milk producers, but the opportunity is not yet accessed to the required extent by most milk producer farmers. This work therefore focuses on identifying the demographic, socioeconomic and institutional factors affecting dairy farmers’ perception and decision on cooperative membership. This helps to formulate intervention areas and implement strategic measures to maximize dairy farmers’ production and productivity; and hence both self and group business increases for the betterment of their livelihood and realize sustainable food security. It also contributes research gap for students & researchers who are curious to do in the area.