To what extent can co-operatives strengthen rural development in sub-Saharan Africa? This paper explores the development of agricultural co-operatives in Ethiopia, particularly the changes in economic functions. Co-operative development in Ethiopia has been strongly influenced by various political regimes. Based on expert interviews and a literature review, we explore the factors that influence a shift in economic functions from provision of inputs to commercialization of farm products. Our review shows that the impact of commercialization on farmer welfare is still inconclusive. Both the institutional environment and the internal governance structure have a hard time adjusting to changing economic conditions.

Foreign direct investment (FDI) facilitates modernization of domestic agri-food systems in emerging economies through increased use of vertical coordination. This paper sheds lights on how international brewer investments in African food systems affect smallholder market participation and value chain development. In particular, we analyze the impact of contracts among malt barley producers in Ethiopia. Using cross-sectional survey data, we employ inverse probability-weighted regression adjustment (IPWRA) and propensity score matching (PSM) techniques to analyze the economic impact of contracting. We find that contrary to popular belief, contracting has positive and significant impact on malt barley production, intensification, commercialization, quality improvement, and farm gate prices, ultimately resulting in increased net income and spillover into the productivity of other food crops.

Multinationals can facilitate modernisation in food value chains in developing countries. While most studies focus on export chains, insight on domestic food chains is scant. Our study aims to provide detailed insights into the process of upgrading domestic value chains. A rapidly growing beer market has attracted foreign brewery companies to invest in Ethiopia. These foreign brewers have introduced new sourcing structures in order to increase the supply of high quality raw material. We have used a case study design to explore upgrading processes in malt barley chains, where malt barley is both a food and a cash crop. By introducing strong vertical coordination between farmers and buyers, facilitated by producer organisations and NGOs, foreign brewers have been able to upgrade malt barley chains. We found that both farmers and brewers have benefitted from this upgrading process.