Market orientation in Ethiopian seed producer cooperatives: implications for performance and members' livelihood improvement

Abstract

Prior researches indicate that farmers, who organize themselves into producer organizations or cooperatives can overcome some of the challenges that affect their livelihood at individual level. Seed producer cooperatives (SPCs) engaged in Ethiopian agricultural sector with the aim to produce and market quality seed to local markets and beyond, to make seed a commercial product, and thus to generate income and improve the livelihood of their members They use market orientation as guiding frameworks to be commercial and perform well in the business. Market orientation is a business approach or philosophy that focuses on identifying and meeting the stated and hidden needs and wants of customers. Although the concept of market orientation and its influence on performance has been widely studied, surprisingly little information exists about agricultural marketing cooperatives. More specifically, empirical evidence on how market orientation practices are applicable to and influence performance of small agricultural marketing cooperatives found in the D&E economies is very scarce. The thesis thereby deepened the understanding of the application and specific practices of market orientation, and its influences on cooperative performance as well as members’ livelihood. The review of literature identified the presence of three seed systems in Ethiopia (formal, informal and intermediary seed systems) and their specific contribution to improve the seed supply. SPCs are categorized in the intermediary seed system because they have features both from the formal and informal seed systems. SPCs make a significant contribution to seed production and marketing through various market channels, including direct sales to customer farmers, sales through contractual agreements with contracting parties, and sales directly to institutional buyers. Moreover, they make specific contributions to high volume seed supply, crop and variety diversification, and seed delivery to farmers. The qualitative study indicated that in the Ethiopian SPCs context the market orientation concept centres around five key themes: quality of produce, external orientation, business organization, value adding activities and supplier access. These key themes of market orientation by and large cover important elements of the market orientation concept in marketing theory, which can be related to the “prototypical” market orientation model. Market orientation in the Ethiopian SPCs context consists of four components: customer orientation, competitor orientation, interfunctional coordination, and supplier orientation. Study in specific market orientation measurement scale development revealed that market orientation in the Ethiopian SPCs context is a multidimensional construct consisting of four dimensions: customer, competitor and supplier orientation, and interfunctional coordination. Moreover, it is suggested that measurement scale development should include both general and context-specific items. Study on the relationship between market orientation components and performance indicated that customer and supplier orientation, and interfunctional coordination contribute to higher business performance, but competitor orientation does not. Business performance also showed positive influence on the livelihood improvement of member farmers. Market orientation of SPCs is very important for business performance and a strong basis for the livelihood of seed producer families. SPCs and organizations that aim to support SPCs should consider these components to monitor the improvement of SPCs towards successful commercial enterprises. Study on identifying key marketing activities in relation to performance showed the presence of considerable differentiation between Ethiopian SPCs in implementing marketing activities. The intensity and quality of implementation of marketing activities in the current Ethiopian SPCs context is found to largely overlap. The study suggested that SPCs need to have resources, and capabilities to coordinate the resources, to implement marketing activities effectively and efficiently so as to provide value to customers.