FACULITY OF AGRICULTURE

DEPARTMENT OF RURAL DEVELOPMENT AND

THE ROLE OF AGRICULTURAL COOPERATIVES IN ACHIEVING SOCIO-ECONOMIC

DEVELOPMENT OF ITS MEMBERS: IN CASE OF TEDA KEBELE, GONDAR.

A SENIOR RESEARCH PROJECT SUBMITTED TO DEPARTMENT OF RDAE: IN

PARTIAL FULFILLMENT OF THE REQUIREMENT FOR B.SC. DEGREE IN
AGRICULTURAL ECONOMICS.

COMPILED BY:

1. ALAYU MUCHE

2. MOTUMA SAFARA

3. TARIKU MERDASA

Advisor: Asefa Tilahun (M.sc.)

June, 2015

Gondar, Ethiopia
 ACKNOWLEDGEMENT

First and for most, we would like to thank God for providing us the opportunity and smoothening in all
ups and downs regarding our research. And then, we are indebted to and gratefully acknowledge Mr.
Asefa Tilahun (M. Sc) who put us in the right track of the initial proposal up to the final report of our
research successfully and timely. Accomplishment of this report would have been very difficulty
without his generous time devotion and contribution from the early beginning of the proposal till the
final write of this research report through adding his constructive and extremely useful comments.
Secondly, our heartfelt thanks go to our family and friends who helped us in writing the whole document
besides their moral and financial support. Finally, Teda kebele farmers and farmers’ cooperative
managers and coordinators should be greatly praised for their zealous efforts in filling questionnaire.

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 TABLE OF CONTENTS

Contents PAGE
ACKNOWLEDGEMENT................................................................................................................II
LIST OF TABLES..........................................................................................................................V
LIST OF ACRONOMY AND ABRIVATION.............................................................................VI
ABSTRACT...................................................................................................................................VII
1. INTRODUCTION....................................................................................................................1
1.1 BACK GROUND OF THE STUDY.........................................................................................1
1.3 OBJECTIVE OF THE STUDY.............................................................................................4
1.4 RESEARCH QUESTION......................................................................................................4
1.5 SCOPE AND LIMITATION OF THE STUDY....................................................................5
1.6 SIGNIFICANCE OF THE STUDY.......................................................................................5
1.7 ORGANIZATION OF THE STUDY....................................................................................5
2. REVIEW OF RELETED LITERATURE...................................................................................7
2.1. THEORETICAL REVIEW...................................................................................................7
2.1.1. Cooperatives in transitional and developing countries...................................................7
2.1.2 ADVANTAGES OF COOPERATIVES............................................................................8
2.2 EMPERICAL REVIEW........................................................................................................9
2.2.1 The Role of Cooperatives in Rural Socio-Economic Development................................9
3 METHODOLOGY.....................................................................................................................11
3.1 Description of the Study Area..............................................................................................11
3.2 Type and sources of data collection.....................................................................................11
3.3 Sampling Technique and Sample Size Determination.........................................................12
3.4 Method of data collection....................................................................................................12
3.5 Methods of data analysis......................................................................................................13
3.5.1 Descriptive Analysis......................................................................................................13
3.5.3 Definition of Dependent Variables...................................................................................15
3.6 HYPHOTESIS.....................................................................................................................18
4. RESULT AND DISCUSSION..................................................................................................19
4.1. Demographical Description of Sampled Respondents........................................................19

III
 4.1.1 Sex of the respondents...................................................................................................19
4.1.2 Educational status of the respondents...........................................................................19
4.1.3 Credit access of House-hold..........................................................................................20
4.1.4 Age of the respondents..................................................................................................21
4.1.5 Land size of the house-hold...........................................................................................21
4.1.6 Income of the House-hold.............................................................................................21
4.1.7 Distance of a Household Head to Agricultural cooperative Office...............................21
4.2 ECONOMETRIC INTERPRETATIONS AND ANALYSIS.............................................22
4.3 Types of Services Agricultural Coops Provide for Its Members.........................................26
4.4 Factors Affecting the Success of Agricultural Cooperatives...............................................27
5 SUMMARY, CONCLUSION AND RECOMMENDATION...................................................28
5.1 Summary and Conclusion....................................................................................................28
5.2 Recommendation.................................................................................................................29
REFERENCE................................................................................................................................30
APPENDICE.................................................................................................................................32

IV
 LIST OF TABLES PAGE

Table 1: Summary of Hypothesis of Explanatory Variables…………………………………17

Table 2: Summary of discrete variables……………………………………………………...19

Table 3: Summary of continues variables……………………………………………………21

Table 4: Summary of Logistic Regression Statistics of explanatory variables……………...21

Table 5: Types of Services Cooperatives provide for their Members….................................25

Table 6: Factors Affecting the Success of Agricultural Cooperatives………………………26

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 LIST OF ACRONOMY AND ABRIVATION

CC Contingency Coefficient
CIS Central Institutional Statistics

COPAC Committee for the Promotion of Agricultural Cooperative

DA Developmental Agent

EC Ethiopian Calendar

EU European Union

FNG Federal Negarit Gazeta

GDP Gross Domestic Product

HIV/AIDS Human Immunity Various Acquired Immune Deficiency Syndromes

ILO International Labor Organization

LPM Linear probabilities Model

RPO Rural Producer Organization

UK United Kingdom

UN United Nation

UNDP United Nation Development Program

USA United State of America

USAID United State Agency for International Development

VIF Variance Inflation Factor

VI
 ABSTRACT

This study analyses the Role of Agricultural Cooperatives in achieving Socioeconomic

Development of its Members in Teda Kebele, Gondar, Ethiopia. This cooperative is a form of
farmers multipurpose cooperative which is village-based and community-based farmers
cooperative with a number of socio-economic functions. The functions include supplying of
agricultural inputs, agricultural output marketing and agricultural credit services. The primary
data on socio-economic, demographic profiles, services given by this cooperative, and factors
that affect the performance of this farmers cooperative was collected using household
questionnaires, Key Informant Interviews and literature review as tools from a sample of 65
households. Data gathered were analyzed by using tables, and percentages. Using Logistic
Regression Model the study found that the variables, sex of household head, age of household
head, educational level of household head, and income of household determine households
socioeconomic development. The first three variables, i.e. sex, age, and education were
significant at 5% levels of significance. And the last variable, income of household was
significant at 1% level of significance. Based on the results of this study, there were some
challenges that hinder the activities of the cooperative: lack of well trained manpower, lack of
member’s education and corruption are the major challenges to the activities of the cooperative.
Besides, there were some recommendations for each problem that were arrived by us. So, there
should be education for the members on how to keep financial and organizational records as
well trained manpower and employees should be hired by the organization.

Keywords:-Agricultural cooperative, Socioeconomic development, Teda, Gondar

VII
 1. INTRODUCTION

1.1 BACK GROUND OF THE STUDY

With almost half of the world’s people living on less than two dollars a day, alleviation of poverty has
become the biggest challenge to the human society. In response, the global campaign against poverty
has gained momentum, with various development actors suggesting the use of different instruments to
alleviate poverty” (Wanyama et al., 2008). Poverty reduction is an area of concern not only to the
government of a nation but also to nongovernmental organizations and the society itself. This is the
reason why many organizations including cooperatives are established and are being working in many
part of the world aiming to ensure the wellbeing of people. There is an emerging consensus among many
actors of development including UNDP, that the cooperative enterprise is one of the new forms of
organization that meet all dimensions in the reduction of poverty (Bernard, 2010).

The cooperative movement in Ethiopia, the spirit of self-help and cooperation, has a long history as part
of the farming community. Various self-help co-operatives still exist. The rural poor in developing
countries are often at a competitive disadvantage in the wider economy because of deep and persistent
market, state and institutional failures. However, there is growing evidence to suggest that membership-
based rural producer organizations (RPOs) can help small-scale, resource- poor farmer to overcome
these failures, participate more actively in the economy, and benefits from processes of growth and
development. Policies and programs designed in recognition of this potential have succeeded in many
parts of Asia, and have contributed significantly to reducing food insecurity and rural poverty, while
also stimulating agricultural development and wider economic growth (Tsegaye, 2008).

These issues are particularly relevant in Ethiopia, a country where food insecurity and rural poverty
persist despite a range of forward-looking policies and investments in the agricultural sector. Indeed,
Ethiopia represents one of the world’s greatest challenges in terms of agricultural development and
economic growth. The country’s agricultural sector accounts for about 40 percent of national GDP, 90
percent of exports, 85 percent of employment, and 90 percent of the poor. Yet 37 percent of its farming
households cultivate less than 0.5 hectares, 87 percent cultivate less than 2 hectares, and just 28 percent
of total agricultural output is commercialized. Marginal productivity of rural labor is estimated at close

1
to zero, while rural access to rural infrastructure such as roads, water, and electricity is extremely limited
(Bernard, 2010).

Over the 15 years, the Government of Ethiopia has embarked on an ambitious plan to promote farmers’
cooperatives throughout the country. The plan aims to extend cooperative services throughout the
country to supply production inputs to smallholders and market surplus output from smallholders. What
remains to be seen is whether the implementation of this plan is contributing to the improvement of rural
livelihoods in the country (Tsegaye, 2008).

International Journal of Community and Cooperative Studies Vol.1, No.1, pp.15-26, September 2014
Published by European centre for Research Training and Development UK with an organizational base
that are indigenous at local level, such as Debo, Iddir, and Iqub. These traditional informal cooperatives
could be a base for the development of the formal cooperatives. In Ethiopia modern types of
cooperatives were officially introduced on decree No.44/1960 (Bezabih, 2009).The main objective of
this proclamation was for improving the standard of living of the farmers, ensuring better business
performance and improving methods of production (Negaritgazeta,1966).

As per the cooperative society’s proclamation number 147/98, to provide for the establishment of
cooperative societies had been also declared by the Federal Government of Ethiopia to bring all types of
cooperative societies under one umbrella (Federal Negarit Gazeta, 1998). The amendment number
402/2004, Council of Ministers Regulation No. 106 /2004, became important instrumental documents in
the cooperative movement of the country and Cooperative Union is composed of more than one primary
cooperative society that have similar objectives; federation is a group that consists of unions, and
primary cooperative societies with similar objectives ( FNG, 2004E.C)

Currently, there is a strong assertion in Ethiopia about the potential role that cooperatives could play in
terms of smallholder commercialization and poverty reduction. Some success stories already achieved
include direct export of coffee, oilseeds and vegetables to markets in Europe and the USA by
cooperative unions in which smallholder farmers are represented as members through primary
cooperatives. However, empirical evidence on the livelihood development and poverty reduction impact
of cooperatives is yet to be established. Few cases of empirical study include ( Francesconi and Heerink,
2010; Bernard et al., 2008 and Francesconi and Ruben, 2007).

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This paper tries to contribute to our understanding of the livelihood and poverty impacts of cooperatives
among rural communities by considering the case of multipurpose agricultural cooperatives in Ethiopia
as the most important forms of rural cooperatives in the country. The paper contributes to the existing
body of literature on the impact of cooperatives by providing empirical evidence about the role of Third
Generation Cooperatives in Ethiopia in terms of livelihood development and poverty reduction among
the rural poor.

1.2 Statement of the Problem

It is well known that the small holder farmers will be comprise the majority of the rural poor
need effective production support and marketing services to facilitate production and sales of
their produce. Production sales comprise the major source of income for the rural poor. It
therefore constitutes a major means of poverty reduction for the majority of the rural poor. Many
scholars have indicated that cooperatives could play a very crucial role in varies socioeconomic
development areas if they operate in accordance to the universally accepted cooperative
organizing principles and core values.

For instance, Alan (1984) cited in Hailu (2007) argued that cooperative link is important for
several reasons such as developing high social capital, reduce labor mobility, and in utilization of
indigenous resources such as local capital for local development. Moreover, Birchall (2003)
stated that “cooperatives have a lot of opportunities in lifting the poor out of poverty and all
other forms of deprivation. More precisely, cooperatives respond to three key concepts
associated with poverty as defined by the World Bank; opportunity, empowerment, and security
(World Bank, 2002).

The broad argument is that cooperatives have the advantages of identifying economic
opportunities for the poor; empowering the disadvantaged to defend their interests; and providing
security to the poor by allowing them to convert individual risks into collective risks.” However,
empirical evidence is necessary to show will be cooperatives contribute to growth and
development in smallholder-based agriculture in order to help realize their potentials. As a result
of the initiatives made by the current Federal government, as mentioned earlier, various
cooperative organizations are being established in different parts of the country.

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Agricultural cooperatives are among these organizations will be operate with the intention to
ensure food security, accelerate rural development and reduce poverty. To be more specific, they
are expected to serve the rural poor in such areas including; provision of market and market
information for members, and supply of modern agricultural inputs (such as fertilizer and
improved seeds).

However, the cooperatives in the study area constrained by problems like good infrastructure,
shortage of financial source, seasonal weather variation, unorganized market and price
fluctuation, Lack of incentives from government.

This study assessed the multiple services that the members get from this farmers cooperative in
hulagoshe kebele, and also identified specific factors that are responsible for poor performance
of this agricultural cooperatives.

1.3 OBJECTIVE OF THE STUDY

1.3.1 General Objective

The General Objective of the study is to analyze the role of agricultural cooperatives in achieving socio-
economic development of its members in south Wello Borena Wereda in Amhara Rigen, Ethiopia.
1.3.2 Specific objective

 To assess socio-economic contribution of agricultural cooperative for its members.

 To identify factors affecting the success of agricultural cooperatives in the study area.

1.4 RESEARCH QUESTION

 What are the socioeconomic contributions of cooperative for its members?
 What factors hinders contributions of agricultural cooperative for its members?

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1.5 SCOPE AND LIMITATION OF THE STUDY

The focus of the study will be on analyzing the role of being a member of agricultural
cooperatives in order to address the socio-economic problem of household in Teda kebele,
Gondar, Ethiopia. Cooperatives are considered as appropriate institutions for socio-economic
development in general and to promote agricultural production and rural development in
particular in the Amhara Regional state. This study addresses the case of Teda district of Gondar
Zone of the Amhara Region using 65 purposely and randomly selected farm households.

Socio-economic and demographic data were collected from the selected farm households using the
questionnaire method of data collection. The sample households were selected purposely and randomly
from the population of farm households in Teda district. Some respondents were also reluctant to
provide relevant information because they seen the questionnaire politically even though orientation has
been made, as a result five questionnaires became invalid and in this case there was a problem to collect
the distributed questionnaire. There was also no available separate data from this agricultural
cooperative office, for instance farmers’ membership and initial capital of the cooperative. Therefore,
these conditions might affect the quality of the paper to some extents.

1.6 SIGNIFICANCE OF THE STUDY

.In brief the general significance of this study well be assessed the role of agricultural Cooperative in
achieving socio economic development of its members.

The study on the role of agricultural cooperatives in reducing rural poverty provides some new empirical
evidences that may help us to understand the conditions under well be agricultural cooperatives are
promoting the standard of living to the rural poor and generating rural welfare improvements in study
area in particular at south wello borena wereda. We also hope this Proposal Project will provide new
insight for policy makers, researchers, and development practitioners.

1.7 ORGANIZATION OF THE STUDY

The study is organized in five chapters. The first chapter includes background of the study,
statement of the problem, objective of the study, significance of the study, scope and limitation
of the study well be are the introduction part of the study. In well be the remaining parts of the
Proposal report are structured in four chapters. The second chapter provides the synopsis of

5
related theoretical and empirical literature well be the third chapter provides the methodology
pursued in answering the research questions. The fourth chapter on the other hand presents the
empirical data collected and briefs out its results, analysis and discussions. The final chapter
concludes the results and forwards recommendations based on the findings of the study.

6
 2. REVIEW OF RELETED LITERATURE

2.1. THEORETICAL REVIEW

2.1.1. Cooperatives in transitional and developing countries

The introduction of a free market economy posed many challenges, particularly for smallholder farmers
and youth entrepreneurs that have limited bargaining power, skills and capacity. Thus, collective efforts
through cooperative organization have been chosen by many disadvantaged groups as a means for
accessing the benefits associated with a liberalized market system. As a result, different types of
cooperatives have been formed to meet different objectives over the years (Bernard, 2010).

The growth of cooperatives in transitional and developing countries at first faced many challenges. In
the transitional countries, cooperatives have been viewed as state enterprises; with the collapse of
communism, these cooperatives collapsed as well. In the developing countries, cooperatives in the
1950s and 1960s operated under the sponsorship of nationalist governments. These governments saw
cooperatives as instruments, taking them over and using them as parasite with in a controlled economy
and as mass organizations through which the ruling party could reach the rural population (Birchal,
2003).

In the USA, some of the largest health providers are consumer cooperatives; in the Pacific Northwest
one cooperative provides health care for 570,000 members; in the Mid-West another has as many as
630,000 members. In Japan, 120 consumer cooperatives provide health care for around three million
members, who meet in small ‘hen’ groups to discuss preventive health issues. Consumer cooperatives,
which emerged in Britain in the 1840s along the Rockdale system9, are today the market leaders in Italy,
Switzerland, Singapore and Japan. They are also very active in the Scandinavian countries and Atlantic
Canada (ILO, 2013).

There were success stories in sugar and cotton cooperatives in India, dairy cooperatives in India and
Bangladesh, coffee cooperatives in Tanzania and Kenya and in several countries a more independent
credit sector. Nevertheless, with market liberalization in the 1990s and the withdrawal of government
support, many state- sponsored cooperatives could not compete with the private sector and had to
shutdown. After these experiences, independent cooperatives have since formed. In the transition
economies, new laws were passed and old cooperatives were returned to their members and new ones
have formed (Bibby, 2006).

7
The USAID has been active in the Balkan region in promoting cooperative formation; governments in
Eastern and Central Europe and the CIS countries can go a long way in promoting the formation of
autonomous cooperatives (TCA, 2013).

Despite the dominant role of agriculture in the Ethiopian economy, the number of non-agricultural
cooperatives outweighs the number of agricultural cooperatives. Approximately 37 per cent of the
primary cooperatives are engaged in agricultural activities. Multipurpose agricultural cooperatives
dominate the list of primary cooperatives (28 per cent) followed by SACCOs, which are organized both
in the rural and urban centers (26 per cent) (ILO, 2010).

2.1.2 ADVANTAGES OF COOPERATIVES

A. Cooperatives can be significant economic players that contribute to sustained growth
processes

The top 300 global co-operatives have a combined turnover of US $1.1 trillion. Cooperatives
employ over 100 million people (more than multinational corporations) and contribute to
increased agricultural productivity, expanded access to financial services and critical utilities
such as electricity. Cooperatives can make a significant contribution to GDP (DFID, 2010).

B. Cooperatives help create more equitable growth

Cooperatives can help make markets work better for poor people, by generating economies of
scale, increasing access to information, and improving bargaining power. Cooperatives can have
millions of members and many operate in the informal sector where they can transform the
survival activities of the poor into viable livelihoods. Cooperative profits are re-invested in the
business or shared with members so the rewards of enterprise are retained locally. Coalitions
between the poor and not-so-poor in one cooperative can help improve the performance of the
enterprise and reduce the poverty of its poorer members (DFID, 2010).

C. Cooperatives help tackle rural poverty

Cooperatives increase the productivity and incomes of small scale farmers by helping them
collectively negotiate better prices for seeds, fertilizer, transport and storage. Cooperatives help
farmers expand market access and capture more of the value chain - for example, by getting

8
involved in processing activities. Farmer groups can help farmers move out of poverty, and
cooperatives are one form that these groups can take. Cooperatives are often the main channel
through which smallholders can access fair-trade (DFID, 2010).

D. Cooperatives expand poor people’s access to financial services

These include credit savings and in some cases insurance and remittances. These services can
support enterprise start-up and expansion; enable the risk taking that can lead to increased
profitability; and reduce vulnerability by allowing the poor to accrue savings, build assets and
smooth out consumption. Cooperatives are active across the financial sector – from micro
finance to mainstream banking. Cooperatives are one of the largest providers of micro finance
services to the poor, and some cooperatives have become major financial sector players. A 2007
IMF study found that cooperative banks are more stable than commercial banks. This finding is
due to the lower volatility of the cooperative banks' returns, which more than offsets their lower
profitability and capitalization. This is most likely due to cooperative banks' ability to use
customer surplus as a cushion in weaker periods (DFID, 2010).

2.2 EMPERICAL REVIEW

2.2.1 The Role of Cooperatives in Rural Socio-Economic Development

Cooperatives can effectively create and maintain employment (both direct/ salaried/
employment, and self employment) in both urban and rural areas of the world. They can provide
self-employment through millions of worker-owned production and service delivery activities
(producer cooperatives); by promoting resource mobilizing and saving for productive investment
as in the case of (financial cooperatives); and provision of affordable goods and services, and
thereby enable the community to save a proportion of their income for investment (consumer
cooperatives). Similarly, user-owned cooperatives such as housing, utility, health, and social care
cooperatives provide affordable access to basic services and help them to get access to various
self-employment opportunities (Woldu, 2007).

On the other hand, cooperatives can create enormous direct or salaried employment
opportunities by engaging themselves in various sectors of the economy such as production,
marketing, processing and so on. According to ILO (2008), in a number of African countries and

9
some other countries around the world, cooperatives are said to be the second largest employer
surpassed only by the government. The practical employment data of many countries around the
world seems to justify this theoretical foundation.

For instance, the data on self-employment and direct employment indicated by Committee for
the Promotion of Agricultural Cooperatives (COPAC) for some African countries shows that
there were 220,713, and 58,468 self employment and direct employment respectively in South
Africa in 1997; while the 1996 corresponding figure for self-employment and direct employment
were 91,035 and 3,235 in Ghana; 27,792 and 42,709 in Morocco; 32,168 and 8,455 in Uganda;
and 23,424 and 494 in Zimbabwe respectively (Woldu, 2007).

By doing so, they permit a large resource mobilization than what could be possible within the
capacity of most individuals and small enterprises, and can serve as a catalyst for local
entrepreneurial growth; retain the capital mobilized by the communities within the communities
and the surplus derived from outside transactions, both of which are very crucial in bringing
further development to give local area. Moreover, cooperatives have the greatest direct economic
impact at the micro level in creating additional income for their members Cooperative form of
enterprises can assure any group of individuals an effective means to combine their resource,
however small they are (COPAC, 2008).

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 3 METHODOLOGY

3.1 Description of the Study Area

The target area of the study is at Teda kebele which is found in Northern Gondar in Amhara regional
state. This Kebele is 25km far from the Gondar town. The targeted area is located north of Fenter
kebele, South of Maksagnit woreda, West of Azezo woreda and East of Mecha Kebele. The total area
coverage of the Kebele is 1824 hectares of land. From this total hectare of land 1073 hectares is for farm
land, 35 hectares is covered by forest and 120 hectares is used for grazing land. The topography of the
area is hillside and the weather type is weynadega.

The latitude is around 1800-2100 meter above sea level. The rain fall is around 150ml per year. The type
of soil that exists in target area is red and black soil. There are two rivers in the area Angecha and
Megecha, Angecha River is flow for some months per year. Both rivers used for irrigating 124 hectares
of land. According to Gondar statistical agency since in 2007 E.c the total population found in Kebele is
around 2450 peoples, from this total population 1223 are males and 1227 are females. The peoples of
the area have good relationship, i.e. social status. The economic activity of the area is mixed farming
system (animal husbandry and crop production activity), the area can grow different types of crops but
largely the farmers adopt cereal crops like teff, sorghum, maize and wheat (Kebele Admistration, 2015).

3.2 Type and sources of data collection

In order to collect the reliable data, both primary and secondary sources of data were used as the
major sources. The secondary data has included information that are obtained mainly from
different reports, websites and literatures, which are relevant to the theme of the study. Primary
data was collected by using questionnaires and interviews. The primary sources of data
questionnaires were also distributed to member farmers that lives in this kebele's and interviews
were taken to Organizers, and managers of Agricultural cooperatives of this kebele.

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3.3 Sampling Technique and Sample Size Determination

The total population of the study area is estimated to be 2450 and 503 households. From these
total households, 65 households were selected randomly whom are a member of agricultural
cooperatives found in this kebele from both sex for questionnaires. Sample size was determined
using the following formula.

The Slovin’s sampling formula with 95 percent confidence level was used to determine sample
size for this study.

Slovin Formula: n = N__

1+N (E) ² Where: n = sample size

N = total number of household

E = margin of error

But due to time, money and other constraints only sample of 65 individual household heads were
surveyed using a purposive and random sampling technique.

Purposive, probability and non-probability sampling technique were applied in the

selection process. Simple random sample was employed in order to select the sample
respondents by taking their list from the sample areas.

3.4 Method of data collection

To collect the quantitative and qualitative data, this study was used the following main
instruments namely questionnaire, interview and organizational document for
quantitative and qualitative data.

3.4.1 Primary data

3.4.1.1 Key Informant Interview
The data collection instrument interview is essential to collect quantitative and
qualitative data. The data was gathered by interviewing some government Agricultural
cooperative officials as well as coordinators of cooperatives who have better knowledge
and experience in the subject matter or in the field. In this study, the key informants

12
were the main actors of the study area such as Agricultural cooperative managers. Face-
to-face interview was held for various issues of the cooperative in order to identify the
true nature of the problem..

3.4.1.2 Questionnaire
To collect relevant data from the selected samples a questionnaire which consist both
open and closed ended questions were applied. In order to get a reliable data from
respondents both structured and unstructured (i.e., close ended and open ended type)
questionnaires were prepared and administered to the targeted respondents.

3.4.2 Secondary Data

Secondary data was collected using reviewing and careful examination of documents,
research reports, published and unpublished writings, and internet websites etc .It was
also collected from documents of agricultural cooperative office of Teda kebele, and
governmental bodies concerned for the sector.

3.5 Methods of data analysis

Different types of analytical methods were used to evaluate the research results and
make a sound conclusion for a given survey information. In this study, data was
analyzed using different quantitative and qualitative tools and methods.

3.5.1 Descriptive Analysis

Descriptive analysis is used to reduce the data in to a summary format by tabulation (the data
arranged in a table format) and measure of central tendency (mean and standard deviation).
Moreover, percentage was also used to describe the general services given by the cooperative..
The reason for using descriptive statistics is to compare the different factors.
Quantitative data was analyzed by using descriptive statistics such as mean, percentage, standard
deviation and frequency.

3.5.2 Econometric Analysis

13
A common and important econometric model, logistic, was applied to determine and predict the
current quantitative findings and their effects on socioeconomic development of members of
agricultural cooperative. In analyzing the data both statistical and econometric methods which fit
the data was employed. For qualitative data analysis methods like concept explanation,
elaborations of respondent’s feedback were used.

3.5.2.1 Binary Regression Analysis

The logit model

Binary explanatory variables can be represented as dummy variables and a binary choice model
assumes occurrences between two alternatives (in this case achieve socioeconomic development
or not). There are several methods to analyze the data involving binary outcomes. However, for
this particular study, logit model was selected. In logit model probabilities are bound between 0
and 1. Moreover, logit best fits to the non-linear relationship between the probabilities and the
explanatory variables. The dependent variable in this case is a dummy variable, which
takes a value of zero or one depending on whether or a farmer is achieved socioeconomic
development or not. However, the independent variables are both continuous and binary. In this
study, logistic econometric model was used to identify the factors (the independent variables)
that affect farmers’ potential of achieving socioeconomic development in the study area.

3.5.2.2 Regression Functions

The equation of regressions on this study is generally built around two sets of variables, namely
dependent variable, Yi, ( socio-economic development) and independent variables, (sex, age,
education, land, income, credit, distance,)
The basic objective of using regression equation on this study is to make the study more effective
at describing, understanding and predicting the stated variables.

Regress development of socio-economic (Y) on Selected Variables: X1, X2, X3, X4, X5, X6 and X7

Where: X1=sex, X2= age, X3= education X4= land, X5= income, X6= credit and X7=
distance are the explanatory variables.

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3.5.3 Definition of Dependent Variables

Model Specification:
As stated above the dependent variables affect each other in a cause and effect relationship, a
simultaneous equation approach will be employed. The model is specified as follows:
Li = ln P = β0+ β1x1 + β2x2+ β3x3+ β4x4+ β5x5+ β6x6+β7x7 +ui , (Gujarati, 2004)
1-p
Where
Ln=natural logarithm

P=probability to achieve socio-economic development

1-p=probability not to achieve socio-economic development

β0=constant term

β1, β2, β3, β4, β5, β6, and β7, are coefficients of explanatory variables; x1, x2, x3, x4, x5, x6, and x7 are
predictor variables included in the model

ui=error term

From the above equation, we can derive p as follows:

P = eβ0 + β1X1+ β2x2+ β3x3+ β4x4+ β5x5+β6x6 +β7x7 ………… Law of exponential function

1+ eβ0 + β1X1 + βx2+ β3x3+ β4x4+ β5x5+ β6x6+β7x7

P
___ =odd ratio
1-p

From this, p = odd ratio

_______
1+odd ratio

Where, e=natural exponential function

15
3.5.4. Definition of Independent Variables

(i) Sex of a household head (X1)

Females show desire to join the agricultural cooperatives than males. Joining would probably promise
higher expected returns to them relative to an outcome of not joining. As females are engaged in
cooperative activities their tendency in participating in building their socioeconomic status and the
community is greater than who are not. Cooperative can increase the confidence of females in their daily
life activities; they can cope-up in terms of moral, labour requirement of working condition with their
counterparts, males. It is therefore, hypothesized that sex might take positive sign in the membership
equation and socioeconomic development.

(ii) Age of a household head (X2)

It is hypothesized that age of the household head will take a positive sign in the socioeconomic
development and membership equation of agricultural cooperatives, in the range of working age. But as
age exceeds working age of the household it will be negative signifying that as a household may
become less risk averse and may not achieve socioeconomic development.

(iii) Education of household head head(X3)

The education level of the farmer is expected to have a positive effect on the decision making process. It
is expected that heads of households with more years of education will be able to understand the benefits
of membership to a cooperative and they may join it. It is expected that education will positively affect
agricultural cooperative acquisition and incomes. This is consistent with other studies which have shown
that education is a great asset if farming is to be productive. Educated farmers may not find it hard to be
productive; they are always ready to develop their socio-economic status.

(iv) Land size of household head(X4)

Land ownership possessed by the household in hectares has a positive sign in development equation
because above certain hectare, people with more land may have moral and incentive to join the
cooperative than those without enough land. Land will, therefore, positively affect agricultural
cooperative acquisition and income per capita.

16
(v) Income of household head(X5)

Household income sources included selling crop production, livestock selling, charcoal selling and etc.
Farmers with more sources of income can afford to achieve socioeconomic development. Therefore,
income is expected to have a positive relationship with socioeconomic development

(vi) Credit access of household head(X6)

Credit acquired before the start of a growing season will have positive effect on the amount of fertilizer
use in the following growing season as well as on incomes realized from farming at the end of that
farming year. Fertilizer use as well as credit will, therefore, have positive signs in the development.
Thus, this variable is expected to have a positive sign in socioeconomic development equation.

(vii) Distance of the agricultural cooperative Office from the household head(X7)

Distance is the location of the offices of the agricultural cooperative from the village where the
household head is located. It is hypothesized that the greater the distance from one’s household head to
the cooperative offices less likely the household would have heard about the importance of cooperative
groups from field officers and hence the less likely they might want to join the club affiliated to
cooperative. The sign for this will be negative.

17
3.6 HYPHOTESIS

1. Hypothesis- The study was hypothesized the following factors affecting socio economic
development of its members in the study area.

2. Independent variable: Sex, Age, Education, land, Income, credit, distance

3. Dependent variable: Socio-economic Development

Table 3.1 Summary of Hypothesis of Explanatory Variables

Independent Variable Dependent Variable Hypothesis

Socio-economic development
of its members
Sex Positive
Age Positive
Education Positive
Land Positive
Income Negative
Credit Positive
Distance Negative

5. Sex, Age, Income, Credit and Education, will have a positive influence on socio-economic
development of its members and income and distance will have negative on it.

18
 4. RESULT AND DISCUSSION

This chapter presents and analyzes the data collected accordingly. First, the demographic profile
of respondents is analyzed and presented followed by the economic interpretations and analysis.
Thirdly, discussion is made based on the data presented and analyzed based on the totally
distributed 70 questionnaires and only 65 of them were valid. The rest five questionnaires were
invalid because the respondents were reluctant to give proper answer to questionnaires.
Finally, the services that are given to members of agricultural cooperatives are analyzed and
discussed briefly. Percentages are used for the presentation analysis of these parts. And also the
data related to the factors that affect the performance of farmers agricultural cooperatives are
presented and analyzed by ranking.

4.1. Demographical Description of Sampled Respondents

4.1.1 Sex of the respondents

Cooperatives enhance the participation of women in their scheme as to promote women

empowerment in socio-economic aspects. So in this kebele the participation of females in
agricultural cooperatives were satisfactory according to the randomly selected sample, especially
according to current policy of government this increment of participation of females around
socioeconomic development of society puts a light to the economy of the country. Thus, among
randomly selected 65 households, 26 of them were female- headed households, and 25 (96.2%)
of them were members of agricultural cooperatives. Compared to females the number of males
who were a member of a farmers’ cooperative was less. Among the total randomly selected 65
respondents, male and female, male-headed households were 39, i.e. 60%, and only 31 of them
were members of this cooperative. This is shows 79.5% were participating in development of
socioeconomic development through these cooperatives (see Table 4.1).

4.1.2 Educational status of the respondents

Educational status is also one of the aspects of demographic factors that can affect the
participation of the household in agricultural cooperatives. Most literature reviews stated
educated households are more participant than the counterparts. It is obvious that those one who
better educated can make better decision which may be crucial for them. During their life span

19
education also plays a critical role in the development and performance of the cooperatives in
that individuals (members) who have better educational level may make better decision in
cooperatives.

To see this relationship respondents were interwiewed to know of their educationa level and the
effect of education in cooperative participation. Of 65 randomly selected househols only 34 of
them were lietrate, and their educational level was mostly, 87% of them were, less than second
cycle. Thus, in this kebele among randomly taken respodents only 52.3% them were litrate, and
the rest 47.7% were illetrate. Furthermore the following Table 4.1 shows the educational
background of the randomly sampled members of the cooperatives was poor.

4.1.3 Credit access of House-hold

Households’ access to credit helps them to fully participate in socioeconomic development
activities, especially for farmers who were a member of agricultural cooperatives. Of the total
randomly selected 65 household heads, only 69.2% of them were willingness to use and able to
get credit access around their living area. The rest, i.e. 30.8% were did not use credit for
socioeconomic development activities, whether the access of credit is found or not around their
area (Table 4.1).

Table 4.1 Summary of discrete variables:

Discrete variable Frequency Valid percent

Female 26 40
Sex of household head Male 39 60
Total 65 100
Illiterate 31 47.7
Educational status of Literate 34 52.3
household head Total 65 100
No access to credit 20 30.8
Credit access of household Access to credit 45 69.2
Total 65 100
Source: Own Field Survey, 2015

20
4.1.4 Age of the respondents
From the below (Table 4.2) descriptive statistics of the age of the respondents were assessed and
the result is discussed as below:
The classification of age into different groups implies that the performance of the household in
achieving socioeconomic development and in being a member of the cooperatives was affected
by the age of each member in the cooperatives. The most of the respondents were aged in the
range of 21- 64 years and they were productive economically. Only some of them were
unproductive labor economically. Of the randomly taken households the mean value of their age
was 49.9 years.

4.1.5 Land size of the house-hold

Land ownership of the households is very important in achieving socioeconomic development activities.
In Teda kebele, of total the randomly sampled 65 head- households, 89.5% them were owned land by
government arrangement and the rest of them,10.5%, were acquired and use land in hiring terms. The
mean value of land ownership, whether it was government arrangement or hiring system, of these head-
households was 2.2 hectare of land (Table 4.2).

4.1.6 Income of the House-hold

The basic hypothesis was that since agricultural cooperative group engages households in
entrepreneurship activities that might be considered as increasing household income as well as help
them achieving socioeconomic development. And members should be well placed (at least compared to
those outside it). The respondents of this kebele answered as they were in a position to have, on average,
higher incomes than non-members of similar household characteristics since they have got better
training on production system and better awareness on marketing condition. Of totally randomly taken
household heads the main value of their income in birr per year was 16558.4. Table 4.2 below presents
the mean value of income status of household heads.

4.1.7 Distance of a Household Head to Agricultural cooperative Office

The greater the distance from one’s household to the agricultural cooperative office in Teda, the less
likely the household would have heard about the importance of agricultural cooperatives and hence the
less likely they might want to join the agricultural cooperatives. Of the randomly sampled respondents
only 9.7% of them were far from agricultural cooperatives more than 2km, and they were less informed

21
about cooperatives. The rest of them, 90.3%, were far from agricultural cooperatives less than the
indicated figure. The mean value of distance of household heads from farmers’ cooperatives was 1.2 km.
Table 4.2 below shows that distance of household head to agricultural cooperatives office.

Table 4.2 Summary of continues variables

Continues Mean Standard deviation

variables
Age of household in year 49.9 15.57
Land ownership of household 2.2 1.22
Income of household in birr 16558.4 9208.93
per year
Distance of household from 1.2 0.50
agricultural cooperative
Source: Own Survey result, 2015

4.2 ECONOMETRIC INTERPRETATIONS AND ANALYSIS

Table 4.3 Summary of Logistic Regression Statistics of explanatory variables

Socioeconomic development Odds Ratio St. Err. z P>|z|

Sex 0.0105579 0.0239446 -2.01 0.045*

Age 1.278654 0.1527782 2.06 0.040*

Education 237.7178 601.7991 2.16 0.031*

Land 3.138001 3.62874 0.99 0.323

Income 1.000814 0.0002981 2.73 0.006**

Credit 2.033725 2.591953 0.56 0.578

Distance 0.5421476 0.6665818 -0.50 0.619

-cons 4.29 5.01 -2.44 0.015

Source: own regression result, 2015

*significance at 5%, **significance at 1%; Number of observation 65;

Note: Use the odds ratio of sex 1/0.0105579 which is 94.71 in interpretation.
22
The most significance factor that determines the socioeconomic development is income of the household
head. When households have a habit and performance of encouraging amount of income, the livelihood
status of the households becomes improved.
As it is seen from the above Table 4.3, R Squared has value of 0.7491 and adjusted R square has
value of 66.10, it may be realized that 74.9% of the variation in socioeconomic development was
explained by the independent variables. The remaining 25.1 % of the variance is explained by
other variables not included in this study and the F test shows the models goodness of fitness
because the prob> F is 0.0000.

Multicollinearity problem
Before interpreting the result, the result of the study was checked whether the variable has
Multicollinearity problem or not. Note that: In order to identify the multicollinearity problem of
the continuous variables the study used VIF (variance inflation factor), and contingency
coefficient for discrete variables. As general rule of thumb, the VIF of each quantitative variable
less than 10 indicates the absence of series problem of multicollinearity in the regression
equation, and the contingency coefficient of discrete variable less than 10 also indicates the
absence of series problem of multicollinearity in the regression equation as indicated in the table
(Appendix B & C).

Goodness of Fit

One of the techniques used to assess the goodness of fit of a model is R square and F test. The
test is used to accept or reject the alternative hypothesis “the model adequately describes the
data”. If the significance level of the test is less than 0.05, it indicates that the alternative
hypothesis is rejected and the null hypothesis which states the inadequacy of the model to
describe the data is accepted. In the case of this study, the significance level of the test was found
to be less than 0.05 (see model summary). Thus, the alternative hypothesis which states that the
model is adequate to describe the data was accepted. The R square also greater than 50%.

As we see from the above table 4.3 only four explanatory i.e. sex of house hold, age of house hold ,
educational status of house hold, and income of house hold per year, were significant. And those
variables can be mandatory to interpret the data neglect of the insignificant variables.

23
From the above logit regression result we have tried to interpret and discuss the
econometric influence of explanatory variable (sex, age, education, and income) on the
dependent variable (socio-economic development) on by one as follows:

Note: Source for interpretations was taken from GUJARATI, 2004 (page 614-625).

A.Sex of household head

The coefficient for discrete variable sex is a positive sign. This is consistent with theory and
implies females are more willingness in participating in socioeconomic development by forming
groups, like farmers cooperative than males. Participating in such a like cooperative help females
to fill the vacancy of lack of labour which they may face during working on their own selves. For
example, there may be carrying of UREA/DAP per 50kg for transportation purpose that females
may see it a problem individually. But they can overcome such problems when they bring their
labour together. Table 4.3 shows that sex has significant influence on households’ achieving
socioeconomic development at 5% level of significance. Thus, the odds ratio in favor of socio-
economic development increases by a factor of 94.71 as the participation of females in
agricultural cooperative increases by 1%.

B. Age of house hold head

The coefficient for variable age of household head is positive. This is theory consistent
in terms of the signs. This means there is a tendency for older farmers to achieve
socioeconomic development. Because as they become matured, farmers will become
more willingness to promote their own effort on economic development of their own
and society too. And the continuous variable age is significant at 5% level of
significance (Table 4.3). Thus, the age of household head does determine the
households’ capacity to achieve socioeconomic development. The age of household
head has odds ratio of 1.28. Therefore, other variables keeping constant, the odds ratio
in favor of the socioeconomic development increases by a factor of 1.28 as the age of
household head increases by one year.

24
C. Educational status of household head
The coefficient for discrete variable education is positive. This is consistent with theory.
Education was expected to have a positive sign because household heads with more years of
education will be able to make better decision, understand the benefits of agricultural cooperative
membership and able to achieve socioeconomic development than illiterate households. From
the results in Table 4.3, education is significant at 5% level of significance. Since the odds ratio
for education is 237.72, other factors being kept constant, the odds ratio in favor of socio-
economic development increases by a factor of 237.72 as the educational status of the household
head changes from illiterate to literate.

D. Income of household head

Income is continues variable stating whether a household is in a position of achieving
socioeconomic development or not. A household with greater income level is certain to achieve
socioeconomic development than a household whose income level is less. The odds ratio for
variable income of household is positive and consistent with theory. The variable is significantly
related to the dependent variable at 1% level of significance. This might mean that households
with higher income per year have higher probability of achieving socioeconomic development.
In Table 4.3 above income of household has odds ratio of 1.0. Thus, the odds ratio in favor of
socio-economic development increases by a factor of 1.0 as the income of the household
increases by 1%, being kept other variables constant.

25
4.3 Types of Services Agricultural Coops Provide for Its Members

Multipurpose farmers cooperative give different services for their members that the members are
enjoying those services given to them; even though members are willing to diverse and increase
the type as well as amount of service of the cooperative in that Kebele. The table below shows
the types of services the multipurpose farmers cooperative provides for its members.

Table 4.4.Types of Services and Cooperatives That Provide Services for Their Members

Types of Services Valid percent

Agricultural input supply 75.1%

Agricultural output marketing 5.7%

Agricultural credit services 8.5%

Provision of agricultural equipment and machinery 3.2%

Other services 7.5%

TOTAL 100%

Source: Own Field Survey, 2015

From the above table multipurpose farmers cooperatives in the Teda is giving different services
for it members such as Agricultural input supply, Agricultural output marketing, Agricultural
credit services and Provision agricultural equipments and machinery , and also other services
which includes oil and sugar. As it is possible to see from the table, it provides about 75.1%
agricultural input supply. In the above table there are different agricultural inputs that both
member and non-member get from the agricultural cooperatives. These are input, chemical
fertilizers (UREA and DAP), improved seed supply and pesticides.

Agricultural output marketing is not the main function of the multipurpose farmers’
cooperatives in this Kebele. This is due to the area is not known by cash crop (like sesame,
coffee etc) growing area, the members sell their products to the near-by market than selling to
this agricultural cooperatives with almost comparable price. The other services provided by this

26
cooperative, which are described above are not significantly carried out by the cooperatives.
They are on the progress to function well for the future.

4.4 Factors Affecting the Success of Agricultural Cooperatives

Agricultural cooperatives that found in this Kebele is influenced by different factors like social
factors including poor infrastructure, lack of incentives from government and non government
organizations: financial shortages and lack of efficient and effective managers, lack of linkage
with other cooperatives and other sectors. Living condition of the society is also another factor
that affects the success of agricultural cooperatives. These and other factors are described in the
below table.

Table 4.5.Factors Affecting the Success of Agricultural Cooperatives

Factors Rank
Poor infrastructure and ware house 1st
Lack of incentives 2nd
Lack of well trained man power employees 3rd
Low Women participations 4th
Insufficient management and decision making 5th
Corruption 6th
Lack of member education 7th
Lack of satisfactory record keeping 8th
Source: Own Field survey, 2015

From table, one can understand that most of the sampled members of cooperatives said lack of
suitable infrastructure, lack of member educations; lack of satisfactory record keeping and lack
of well trained man power and employees was the main factors that impeded the success of
agricultural cooperatives. There are also few members who said the factors were Low women
participation. On the other hand there were also considerable problems in issues like Corruption,
and Ineffective management and decision making.

27
 5 SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary and Conclusion

This study analyses the Role of Agricultural Cooperative in achieving Socio-economic
Development of its Members in Teda Kebele, Gondar.
Using data from questionnaires of household and Cooperative managers, this study tests the
hypothesis that these variables were positively impacted the socio-economic development of the
household. The study used purposive and random sampling methodology organized to reduce
selection bias as well as endogeneity problems in the sample. The primary data on socio-
economic and demographic variables was collected using household questionnaires, Key
Informant Interviews and literature review as tools from a sample of 65 households.

Logit analysis results show that sex of household head (p < 0.045), age of household head (p <

0.04), educational status of household head (p < 0.031) and income (p < 0.006) determines
household socio-economic development.
The results also show attract females more than males. The results shows that land ownership of
household, credit access of household, and distance of household from cooperative office do not
determine household socio-economic development.

The members of the agricultural cooperatives had habit of working together, self help through
mutual help and honesty and friendly kind but they lacked honesty and friendly kind in their
organization.

Multipurpose farmers’ cooperatives located near by the small town of the kebele along the main
road. This accesses to the main road, updated information on market outlet especially in Micro
business activities, access to technology such as telecommunication, electricity etc made it to
become a competent cooperative with other cooperatives and private suppliers.

According to the member’s perception of the cooperatives performance status was relatively
good which was resulted in distribution of surplus to members according to the service they used
with the cooperative. As explained in the study result there was lack of member educations, lack
of satisfactory record keeping and lack of well trained man power.

28
5.2 Recommendation.
Although membership is voluntary and open to anyone who wants to join the cooperatives
without any restriction by gender but the data showed that men’s membership was low in
cooperative, i.e. more than 59% of the cooperatives members were female headed household.
Socio-economic will be realized when both sexes equally participate and contribute to economic
activities. So, there should be gender sensitization and encouragement in that cooperative
organization.

A household head with more experience (older) is needed in Cooperative organization so as

encourage the younger household head to fully participate in economic activities that might
carried-out by that agricultural cooperatives. Therefore older members should have to be
included in cooperative so as honesty and friendly promote their experience in their organization
to make their cooperation continuous and successful in all directions.

Illiteracy rate of household should be minimized by the cooperative organization so as to make

the member active participant in decision making process. Since an educated household easily
can understand the ways and value of saving, production, market information; when and where
to sell his/her production, adopting new technologies and more.

Income status of household significantly shows whether household is on verge of achieving

socio-economic or not. Income plays great role in contrition of economy of the household.
Therefore income of household should be encouraged to the amount needed so as to achieve the
socio-economic development of the household.

29
REFERENCE
Bernard T. et al., 2010. Cooperatives for Staple Crop Marketing: Evidence from Ethiopia. International
Food Policy Research Institute. Washington.

Bibby A., 2006. HIV/AIDS and Co-operatives, Manchester: Co-operative College

Birchall, J., 2003. Rediscovering the cooperative advantage: Poverty reduction through self-help.
International Labor Office, Cooperative Branch. Geneva

Chalchissa, L., 2000. Cooperative Entrepreneurship in Transition Economies: the case of Amecha
Multipurpose agricultural cooperatives, International Labour Office, Addis Ababa, Unpublished.

Co-operatives UK, 2008. Co-operative Review 2008, Manchester

DFID, 2010. The role of cooperative the third world countries.

ILO, 2012. Cooperatives offer migrant workers options for better lives. Geneva

Federal Negarit Gazeta, 1998 E.C. A proclamation to provide for the establishment of agricultural
cooperative society: proclamation No.85/1986. Addis Ababa, Ethiopia

Francesconi G. and Heerink N., 2010. ‘Ethiopian agricultural cooperatives in an era of global
commodity exchange: does organizational form matter?’, Journal of African Economies, 20(1),
1–25

Francesconi G. N. and Ruben R., 2007. ‘Impacts of collective action on smallholders’

Commercialization: evidence from dairy in Ethiopia,’ Paper prepared for presentation at the I
Mediterranean Conference of Agro-Food Social Scientists. 103rd EAAE Seminar Adding Value
to the Agro-Food Supply Chain in the Future Euromediterranean Space, Barcelona, Spain, April
23–25.

Gujarati, D.N., 2004. Basic Econometrics, 4th ed. Boston: McGraw-Hill

Maddala, G. S., 2001. Introduction to Econometrics. 3rd Ed. New York: J. Wiley and Sons.

Nadezhda Pashkova, 2009Food marketing cooperatives of Crete: A financial assessment within the EU
context Department of Business Economics and Management

Negarit Gazeta, 2004E.C. The Imperial Government of Ethiopia Ministry of Pen. Co-operative
Societies Proclamation No.241, 3rd September 2004 Ec, Addis Ababa.

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TCA, 2013. Annual report for the year UN published

Tsegay Berhane, 2008. Financial performance of cooperative in Enderta woreda, Tigray region Ethiopia.
Mekelle University...

Walton, J., 2001. “Agricultural Cooperatives in Ethiopia.” ACDI/VOCA.World Bank (2002). Report on
World Development. World Bank (2009). Poverty Reduction and Economic Management:
Assessing the use of Poverty and Social Impact Analysis I World Bank Development Policy
Loans

Wanyama, F. O. et al., 2008. “Encountering the Evidence: cooperatives and Poverty Reduction in
Africa.”

Woldu, 2007. A Working paper on social and cooperative Entrepreneurship.

31
APPENDICE
Appendix A: Logistic Regression Result

Logistic regression Number of obs = 65

LR chi2(7) = 66.10

Prob > chi2 = 0.0000

Log likelihood = -11.070963 Pseudo R2 = 0.7491

socioeconomicdevt Odds Ratio Std. Err. z P>|z| [95% Conf. Interval]

sex .0105579 .0239446 -2.01 0.045 .0001239 .8995929

age 1.278654 .1527782 2.06 0.040 1.011692 1.616061
education 237.7178 601.7991 2.16 0.031 1.664124 33957.65
land 3.138001 3.62874 0.99 0.323 .3253388 30.26708
income 1.000814 .0002981 2.73 0.006 1.00023 1.001399
credit 2.033725 2.591953 0.56 0.578 .1672816 24.725
distance .5421476 .6665818 -0.50 0.619 .0487021 6.035144
_cons 4.29e-13 5.01e-12 -2.44 0.015 4.84e-23 .003801

Note: 1 failure and 2 successes completely determined.

Appendix B: Summary for Multicolinearity for Discrete Variables

Variable Contingency Chi-square Sig.

coefficient
Sex 0.368 10.168 0.038
Education 0.871 1.139E2 0.871
Credit 0.844 1.604E2 0.953

32
Appendix C: Summary for Multicollinearity for Continuous Variables

. vif

Variable VIF 1/VIF

income 6.00 0.166732

land 5.74 0.174186
age 1.30 0.771705
sex 1.29 0.778077
distance 1.24 0.806866
education 1.23 0.815157
credit 1.20 0.834921

Mean VIF 2.57

Appendix D: Marginal Effects after Logit

Variable | dy/dx Std. Err. z P>|z| [ 95% C.I. ] X

Sex*| -.8113624 0.18837 -4.31 0.000 -1.18057 -.442155 0.6

age | .0603222 0.02904 2.08 0.038 0.003408 .117236 49.9538

education*| .8701491 0.14758 5.90 0.000 0.580892 1.15941 0.523077

land | .2806404 0.28468 0.99 0.324 -0.277327 .838607 2.20385

income | .0001998 0.00008 2.64 0.008 0.000051 .000348 16558.4

credit*| .1686819 0.28887 0.58 0.559 -0.397497 .73486 0.692308

distance | -.1502404 0.30622 -0.49 0.624 -.750426 .449946 1.13692

(*) dy/dx is for discrete change of dummy variable from 0 to 1

Marginal effects after logit

y = Pr (socio-economic dev't) (predict)

33
 = .43220478

Appendix E: QUESTIONNAIRE PART

A. Household Characteristics

1. Sex of respondent

a. Male b. Female

2. Age of respondent ________________

3. Marital Status

a. Married b. Divorced c.Widowed d. Separated e. Single

4. Level of education

a. illiterate b. literate

5. Are you the head of the household? If yes, go to question 7.

a. Yes b. No

6. Sex of the household head

a. Female b. Male

7. What is your household Size? ________________

8. Among your house hold how many of them are working-age and are not?
________________&________________

9. What is the primary occupation of the household head?

a. Smallholder Farmer c. Worker (employed)

b. Small Scale Business d. No I don’t have e .Others (specify)

34
B. Sources of Income and Expenditure

10. What are your major sources of income?

a. Livestock Sales b. Crop Sales c. charcoal sales

d. Agricultural cooperative Small Scale businesses

e. Small scale businesses other than agricultural coops activities

f. Others (specify)

11. What are your major sources of expenditure?

a. access to fertilizer and improved seed

b. for raring animals

c. monthly/yearly contribution of coops

d. Others (specify)

C. Membership

12. Are you a member of any group?

a. Yes b. No

13. If no, what factors hinders you?

a. initial capital requirement d. lack of awareness

b. distance from cooperatives e. others (specify)

c. lack of coordination and management of coops

14. If yes, what type of group is it?

a. Club c. Cooperative (agricultural)

b .Association/trust d. Other (Specify)

35
15. If you are a member of agricultural coops what factor influenced you to join the group?
Yes (=1) No (=0)

a. Access to credits d. Lack of working capital/cash

b. Save money e. Lack of market access

c. High price of fertilizers f. Other (Specify)

16. What are your benefits you got from being a member of agricultural coops?

a. easily access to fertilizer and improved seed

b. proper management of production

c. access to credit and training

d. no benefit e. others (specify)

17. How do you see the pricing strategy of the agricultural cooperatives in input/output
marketing?

a) Poor b) No Difference

c) Reasonable d) Attractive/Very Good

18. Membership Duration in Number of Years ______

19. Share Contribution in Number ________

20. Total Annual Income before membership________________

21. Total Annual income after membership_____________

22. Total expenditure before membership____________

23. Total expenditure after membership_______________

D. Land Holding Size:

24. Do you own land?

36
a. Yes b. No

25. If yes, what type of land holding arrangement? Yes(=1) No(=0)

a. Customary c. Leasehold

b. Freehold d. Others (specify)

26. What size of land do you own? _____________

E. Distances to Agricultural Coops Office

27. How far do you stay from agricultural coops local office? _____________

F. credit

28. Is/are there any access to credit institution around you?

a. Yes b. No

29. If yes, what benefit(s) you get from it?

a. borrowing money for capital requirement of coops

b. borrowing money to buy fertilizer and improved seed from coops

c. access to owning land

d. others (specify)

Appendix F: INTERVIEW PART

A. Checklist for agricultural coops coordinators and managers Interviews

1. Interview the coordinators and managers on the specific information regarding:

Foundation of the coop in year

Initial capital of the coop

Annual income of the coop

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Annual expenditure of the coop

Number of agricultural coops activities

f. Number of members per agricultural coops

g. Location of local agricultural coops offices.

2. Are agricultural coops formed at Kebele, woreda or zone level?

3. What is actually the eligibility criterion for a household/individual to join agricultural coops?

B. Perceived Constraints of Agricultural Cooperative: Yes (=1) No (=0)

I Organizational/ Internal Problems

1.1 Limited Capacity of organizations & Management

1.2 Inadequate initial capital

1.3 lack of coordination from top management

1.4 Poor participation of members

1.5 Others (specify)

II External Problems

2.1 Small and fragmented farm holdings

2.2 Lack of interest of the house hold

2.3 Price increase for agricultural inputs

2.4 Existence and dominance of other competitors

2.5 Low price of produces

2.6 Others (specify)

III Infrastructural Problems

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3.1 Availability of trained man power

3.2 Information on market oriented production

3.3 Communication Technology

3.4 Marketing Infrastructure

3.5 Storage and transportation facility

3.7 Linkage with Financial institution

3.8 Electrification

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