I have seen some recipes that call for nonfat powdered milk for a binding agent. Is this necessary or is there something else to use? Do I need to use anything at all?
You can use a soy protein concentrate as an alternative. The reasoning behind the usage of these is pretty much to maintain the bulk and moisture content.
Just an FYI:
I haven't had to use it - yet. These are a couple of excerpts from Great Sausage Recipes and Meat Curing by Rytek Kutas, a book well worth buying.
"... Soy protein concentrates help bind the meat together as well as retain the natural juices of the meat. The job that non-fat dry milk or soy protein performs in making sausage is very useful indeed. These products are rarely used when making fresh sausage ..."
"... The milk has to be a very fine powder and not the granules used for making milk at home. Better still, it should have the consistency of corn starch ..."
Here is a link to descriptions of many sausage ingredients:
Sausage Ingredients (http://www.susanminor.org/forums/showthread.php?t=674)