Analysis of the Effectiveness of Coffee Cooperatives in Coffee Value Chain in Melka-ballo Woreda, East Hararghe Zone, Oromia Regional State, Ethiopia

Abstract

This study was aimed at analyzing the effectiveness of coffee value chain in Melka-ballo woreda of Oromia Region with specific objectives of identifying actors in the coffee value chain and describing their roles; examining the linkages between cooperatives and other actors in the coffee value chain; and analyzing determining factors affecting coffee cooperatives in creating effective value chain. The study was conducted on three primary coffee cooperatives by selecting 291 member respondents by using multi-stage sampling technique. Data were collected from both primary and secondary sources. Primary data was collected using semi-structured questionnaire. The collected data were analyzed by using descriptive statistics like percentage and frequency, three level likert scale and binary logistic regression. The result of the descriptive statistics showed that in the study area there are two types of actors namely, direct/primary and indirect/supportive actors and most of them perform more than one role in the value chain. The result also indicated that there are five types of linkages between actors namely; Horizontal linkage, Vertical linkage, Technical Support Linkage, Business linkage and Marketing Linkage. The opinion of the respondents showed that the linkage among actors in the coffee value chain was weak. Moreover, the result of binary logistic regression revealed that corruption, Training, and management capacity has statistically significant partial effect on the effectiveness of coffee cooperatives in coffee value chain at p-value less than 0.01 whereas access to credit, technology and proximity to cooperatives has statistically significant partial effect on the effectiveness of cooperatives in coffee value chain at p-value less than 0.05. Accordingly, access to credit, training and management capacity has statistically significant positive effect on the effectiveness coffee cooperatives in coffee value chain whereas corruption, technology and proximity to cooperative society has statistically significant negative effect on dependent variable “effectiveness of coffee value chain”. It was recommended that greater attention should be given by all stakeholders and actors in the coffee value chain to design strategies on how to smooth their relationship and avoid any bottlenecks such as corruption, inefficient management and poor quality training and designing simple and cheap technology. Sufficient and interest free credit facilities should be available in a timely manner to cooperative members and strategies should be designed to link microfinance with the cooperatives. Keywords: Coffee cooperative, Ethiopia, Effectiveness, Linkage, Value chain DOI : 10.7176/EJBM/11-7-02 Publication date :March 31 st 2019