The value of milk and dairy products as part of the human diet is well documented. Milk is a highly nutritious natural food of particular benefit for growing infants and lactating mothers. Milk contains valuable minerals, vitamins, protein and fat which are the building blocks for healthy growth and development. Recognition of the value of milk is reflected in the increasing interest in development programmes focused on small scale dairying in developing countries where malnutrition and poverty are the main challenge. Market oriented small scale dairying has the potential to increase household income, reduce losses and generate employment in processing and marketing. Potentially, therefore, small-scale dairying is a viable tool to spur economic growth and alleviate poverty. Interventions in small scale dairying need to be relevant to the informal market given that the informal market is and will continue to be important in the foreseeable future. However, the growing demands of milk markets for quality and food safety need to be taken into account when designing interventions. This paper examines the types and importance of small scale milk producers in developing countries, shows projected market demands and indicates the complexities of the multiple dairy market chains. It examines interventions and approaches to successful dairy development and identifies issues for consideration in designing small scale dairy development. A Market Oriented Dairy Enterprise (MODE) approach is suggested as a possible pathway to improving the income of small scale dairy producers using a graduated risk based approach. Small-scale milk producers Demand for milk in developing countries is expected to increase by 25 percent by 2025 (Delgado et al, 1999), partly due to population growth but also because disposable income is being spent on a greater diversity of food products to meet nutritional needs. Small scale producers generate the vast majority of this milk. They include smallholder farmers, who practice a mixture of commercial and subsistence production, provide the majority of labour from within the family, and produce a variety of crops and livestock products to spread the risk of failure, as well as pastoralists who depend mainly on livestock. Milk production systems vary hugely across agro-ecological zones but are usually dependent on the availability of range or pasture land (for grazing and fodder production), the dairy animals to produce the milk and the water needed to maintain the animals. Feed forms the largest input to most milk production systems while support services such as animal health, AI, etc., are essential to ensure productivity can be achieved and maintained. Trends in developed nations show intensification of milk production in order to reap the benefits of economies of scale. The same is true of some emerging economies, such as Brazil, where the number of small scale producers has decreased as national production has increased, whereas in many developing countries with a