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Do bottom-up and independent agricultural cooperatives really perform better? Insights from a technical efficiency analysis in Ethiopia

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  • Tafesse W. Gezahegn
  • Steven Van Passel
  • Tekeste Berhanu
  • Marijke D’haese
  • Miet Maertens

Abstract

The cooperative landscape in Ethiopia is very heterogeneous with a mixture of remains of the pre-1991 government-controlled system and new post-1991 bottom-up collective action initiatives. This heterogeneity, coupled with a large growth in the number of cooperatives in the country, offers an interesting perspective to study the determinants of the (in)efficiency of cooperatives. In this paper, we analyse the performance of Ethiopian agricultural cooperatives, focusing on the degree of technical (in)efficiency and its determinants. We use the stochastic frontier approach in which we account for heteroskedasticity and the monotonicity of production functions, presenting a methodological improvement with respect to previous technical efficiency studies. The results show that NGO- and government-initiated cooperatives are less efficient than community-initiated ones, implying that governments and NGOs should not interfere too strongly in cooperative formation. Cooperatives with a high degree of heterogeneity in members’ participation are found to be about 98% less efficient, while cooperatives that have paid employees are 33% more efficient. Besides, results show that cooperatives in Ethiopia function more efficiently if they incentivize committee members through monetary compensation.

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  • Tafesse W. Gezahegn & Steven Van Passel & Tekeste Berhanu & Marijke D’haese & Miet Maertens, 2020. "Do bottom-up and independent agricultural cooperatives really perform better? Insights from a technical efficiency analysis in Ethiopia," Agrekon, Taylor & Francis Journals, vol. 59(1), pages 93-109, January.
    • Handle: RePEc:taf:ragrxx:v:59:y:2020:i:1:p:93-109
    DOI: 10.1080/03031853.2019.1663223
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    Cited by:

    1. Stanley Kojo Dary & Jasper Grashuis, 2021. "Characterization of farmer‐based cooperative societies in the upper west region of Ghana," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(4), pages 669-687, December.
    2. Markose Chekol Zewdie & Michele Moretti & Daregot Berihun Tenessa & Zemen Ayalew Ayele & Jan Nyssen & Enyew Adgo Tsegaye & Amare Sewnet Minale & Steven Van Passel, 2021. "Agricultural Technical Efficiency of Smallholder Farmers in Ethiopia: A Stochastic Frontier Approach," Land, MDPI, vol. 10(3), pages 1-17, March.
    3. Faridzah Jamaluddin & Norman Mohd Saleh & Azizah Abdullah & Mohamat Sabri Hassan & Noradiva Hamzah & Romlah Jaffar & Sarah Aziz Abdul Ghani Aziz & Zaini Embong, 2023. "Cooperative Governance and Cooperative Performance: A Systematic Literature Review," SAGE Open, , vol. 13(3), pages 21582440231, September.
    4. Gezahegn, Tafesse & Van Passel, Steven & Berhanu, Tekeste & D'Haese, Marijke & Maertens, Miet, 2020. "Structural and Institutional Heterogeneity among Agricultural Cooperatives in Ethiopia: Does it Matter for Farmers’ Welfare?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(2), August.
    5. Shemei Zhang & Bin Wu & Rui Chen & Jingzhi Liang & Nawab Khan & Ram L. Ray, 2023. "Government Intervention on Cooperative Development in Poor Areas of Rural China: A Case Study of XM Beekeeping Cooperative in Sichuan," Land, MDPI, vol. 12(4), pages 1-15, March.

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