Tropentag, September 20 - 22, 2017 in Bonn "Future Agriculture: Social-ecological transitions and bio-cultural shifts"

The Challenges of Producer Organisations in Impacting Smallholders' Productivity and Commercialisation: Evidence from Ethiopia

¹International Food Policy Research Institute (IFPRI), Ethiopia
²Univeristy of Groningen, The Netherlands

Abstract

Previous studies suggest that the impacts of cooperatives involved in staple crops marketing in Africa on smallholders' commercialisation is very modest. Moreover, the management of these organisations is weak, membership rates are low and the organisations are financially constrained. In this study, we use panel data collected in 2012 and 2014 from Ethiopia to further disaggregate the impacts of market-oriented producer organisations to explain why the impacts are weak and its implication on financing and long term competitiveness of the cooperatives. Unlike previous studies, which studied only the impacts of membership, we distinguished village, member and transactional level impacts.

The result indicated that the most significant positive effect of the FMOs under study is village level impact. All farmers in the village where the farmers marketing organisation (FMO) is present benefit from a competitive market created by the cooperatives. Specific benefits to members are weak and insignificant for the outcome variables under study. This indicates that FMOs in Ethiopia are caught in the efficiency (becoming important market actor) and equity (serving all the people in the village) dilemma, which has resulted in insignificant exclusive benefit to members who would potentially invest and improve the efficiency of the organisations. Furthermore, two major insights are drawn from the findings. First, studies comparing members with non-members from different villages lead to biased measurement of membership benefits since a village community, irrespective of membership, may benefit from the FMO's operations through increased competition at the local market level. Thus, all reported benefits of membership in previous studies are rather benefits of increased competition at the village market level triggered by the introduction of FMOs. Second, the results confirm that the present organisational structure does not provide incentives to become member or to make voluntary investments in FMOs. This further deteriorated the resource constraints the FMOs are facing.

Keywords: Africa, commercialisation, Ethiopia, marketing cooperatives, members willingness to invest, producers organisations, smallholders

Contact Address: Getaw Tadesse Gebreyohanes, International Food Policy Research Institute (IFPRI), Addis Ababa, Ethiopia, e-mail: g.tadessecgiar.org