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Determinants of Commitment to Agricultural Cooperatives: Cashew Nuts Farmers in Benin

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  • Mensah, Edouard R.
  • Karantininis, Kostas
  • Adegbidi, Anselme
  • Okello, Julius Juma
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    Abstract

    Forming and using cooperatives as marketing channel is usually advised to African smallholder farmers for overcoming the constraint of market access. However, limited evidence of cooperative behavior in marketing has been observed. In this paper, we estimate a two-stage model of commitment to cooperatives by cashew nut farmers in Benin, West Africa. In the first stage, we use data on 109 non-members and 168 members and estimate a binary Logit model of farmer’s discrete choice with respect to committing to membership. In the second stage, we use the members’ data to estimate a Tobit model of the proportion of produce delivered to the cooperative, after controlling for the endogeneity of the proportion of presales. Empirical results reveal that the commitment to membership depends on the assessment of prices offered by the marketing channels, the farmer’s preferences for the specific attributes of the channels, the total farm size, and some psycho-sociological factors; the commitment to business depends on prices and transaction costs in the channels. Our findings call cooperatives for improving commitment by considering the subjective and economic reasoning of the farmers, and setting formal contracts between members and their organization.

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    Bibliographic Info

    Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 125946.

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    Date of creation: 2012
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    Handle: RePEc:ags:iaae12:125946

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    Keywords: Benin; contracts; cooperatives; market access; prices; transaction costs; Agribusiness; Industrial Organization; Institutional and Behavioral Economics; Marketing;

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    1. Kaganzi, Elly & Ferris, Shaun & Barham, James & Abenakyo, Annet & Sanginga, Pascal & Njuki, Jemimah, 2009. "Sustaining linkages to high value markets through collective action in Uganda," Food Policy, Elsevier, vol. 34(1), pages 23-30, February.
    2. Bardhan, Pranab, 1989. "The new institutional economics and development theory: A brief critical assessment," World Development, Elsevier, vol. 17(9), pages 1389-1395, September.
    3. Murray Fulton & Konstantinos Giannakas, 2001. "Organizational Commitment in a Mixed Oligopoly: Agricultural Cooperatives and Investor-Owned Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1258-1265.
    4. Marcel Fafchamps & Ruth Vargas Hill, 2005. "Selling at the Farmgate or Traveling to Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 717-734.
    5. Barham, James & Chitemi, Clarence, 2009. "Collective action initiatives to improve marketing performance: Lessons from farmer groups in Tanzania," Food Policy, Elsevier, vol. 34(1), pages 53-59, February.
    6. Golovina, Svetlana & Nilsson, Jerker, 2009. "Difficulties for the Development of Agricultural Cooperatives in Russia: The Case of the Kurgan Region," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(1).
    7. Sexton, Richard J. & Iskow, Julie, 1988. "Factors Critical to the Success or Failure of Emerging Agricultural Cooperatives," Information Series 11921, University of California, Davis, Giannini Foundation.
    8. Ajzen, Icek, 1991. "The theory of planned behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 50(2), pages 179-211, December.
    9. Staatz, John M., 1989. "Farmer Cooperative Theory: Recent Developments," Research Reports 52017, United States Department of Agriculture, Rural Development Business and Cooperative Programs.
    10. Bruynis, Chris L. & Goldsmith, Peter D. & Hahn, David E. & Taylor, William J., 2001. "Key Success Factors for Emerging Agricultural Marketing Cooperatives," Journal of Cooperatives, NCERA-210, vol. 16.
    11. Williamson, Oliver E., 1989. "Transaction cost economics," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 3, pages 135-182 Elsevier.
    12. Burt, Lawrence A. & Wirth, Myron E., 1990. "Assessing the Effectiveness of Farm Supply Cooperatives: A Comparison of Farmer and Manager Viewpoints," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 5.
    13. Fulton, Joan R. & Adamowicz, Wiktor L., 1993. "Factors That Influence the Commitment of Members to Their Cooperative Organization," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 8.
    14. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-21, May.
    15. Kostas Karantininis & Angelo Zago, 2001. "Endogenous Membership in Mixed Duopsonies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1266-1272.
    16. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
    17. Jill E. Hobbs, 1997. "Measuring the Importance of Transaction Costs in Cattle Marketing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1083-1095.
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