Impact of membership of seed-producer cooperatives on commercialisation among smallholder farmers in the central highlands of Ethiopia

Abstract

Low agricultural commercialisation due to low productivity and a lack of access to and use of improved seeds are common features of smallholders in the Ethiopian highlands. Seed-producer cooperatives (SPCs) were established and strengthened in these highlands to facilitate smallholders’ access to improved seed. Using survey data collected from 425 randomly selected smallholders, a full-information maximum likelihood endogenous switching regression (ESR) model and a propensity score-matching (PSM) technique were employed to estimate the impact of membership of seed producer cooperatives on the output and input commercialisation of members and non-members. The results show that farm size, availability of extension services, household size, farm income, participation in other farmers’ organisations, access to training, and education of the household head are key factors associated with cooperative membership. The results from the ESR and PSM models are consistent and show that being a member had a positive and statistically significant impact on tef and wheat farmers’ output and input commercialisation. Non-members’ status in output and input commercialisation would have been improved if they had been members of seed-producer cooperatives. The results indicate that joining seed-producer cooperatives has proven to be a beneficial approach for farmers, as it minimises transaction costs and facilitates farmers’ access to input and output markets for tef and wheat crops. The results show that, if farmers were not part of SPCs, the commercialisation of their tef and wheat output would have decreased by 43 and 31 percentage points, respectively. Furthermore, if non-members had joined the seed cooperatives, their tef and wheat output commercialisation levels would have increased by 19.5 and 13.3 percentage points, respectively. The findings imply that governments and development partners should deliver training for SPC members on quality seed production and management in their farm operations and assist SPCs in setting up seed storage facilities and acquiring winnowing machines.