Ethiopian Agricultural Cooperatives in an Era of Global Commodity Exchange: Does Organisational Form Matter?

Abstract

In Ethiopia, agricultural cooperatives are expected to play a key role in linking smallholder farmers to the recently established commodity exchange system. Recent research has found, however, that the commercialisation levels of cooperative members do not differ significantly from those of non-member farmers in Ethiopia. We argue though that the impact of cooperative membership on commercialisation may vary significantly depending on the type of cooperative organisations considered. Applying propensity score matching as well as regression analysis to a set of farm household living in rural areas where the commodity exchange system was to become operational, we consistently find significantly higher commercialisation rates, when compared with non-member famers, for farmers belonging to marketing cooperatives. Livelihood cooperatives, on the other hand, appear to have insignificant or negative impact on Ethiopian farmers’ commercialisation. We conclude that the selective inclusion of marketing cooperatives in the commodity exchange system has the potential to simultaneously reduce the rural poverty and maximise agro-commodity commercialisation in Ethiopia.