Measuring the Benefits of Smallholder Farmer Membership in Producer-Controlled Vertical Value Chains: Survey Findings From a Development Project in East Africa

Abstract

The question addressed in this article is what precisely are the benefits that small‐scale farmers in the developing world receive from being members of producer‐controlled vertical value chains? A baseline comparative survey was conducted of members and non‐members of four vertically coordinated dairy cooperatives, three in Kenya and one in Uganda (N = 3,986), which are part of a larger five‐year longitudinal cooperative study. The study measures both objective income gains and subjective satisfaction gains from cooperative membership. Cooperative members have a small but statistically significant advantage over non‐members in income from dairy, but other incentives for membership are based on selective incentives (i.e., provision of non‐income services to members) and social capital (i.e., trust that the cooperative will purchase their milk and pay them a fair price). These findings suggest that the motivations for cooperative membership in developing countries are not dissimilar from motivations of cooperative members in more developed countries. This coupled with similar organizational design issues suggests that greater attention should be paid to larger‐scale vertically coordinated collective action models in development theory and research.

Building Sustainable Smallholder Cooperatives in Emerging Market Economies: Findings from a Five-Year Project in Kenya

“…The findings described below are based on qualitative and quantitative data from two case studies of smallholder dairy cooperatives in Kenya during a five-year period, from 2011 to 2015 [3]. The project provided both baseline and endline data based on cooperative financial performance, interviews with cooperative leaders, and the impact of the donor agency's technical assistance on changes in their business plans and practices.…”

“…The two cooperatives described in the paper are part of a Cooperative Development Project (CDP), funded by USAID and led by Land O'Lakes International Development [3]. At the outset of the project, these cooperatives were developing plans to take advantage of the demand for milk and value-added dairy products in the growing Kenyan economy.…”

“…At the same time, however, liberalization has meant that smallholder cooperatives now have to compete with multi-national agricultural firms, as well as medium to large local farms, while national governments are much more likely to make the cooperatives responsible for their debts. Consequently, in order to survive smallholder cooperatives must develop effective business plans and practice if they are to remain sustainable in the new environment [1][2][3].…”

The Underrepresentation of Women in Leadership Positions in Rural Russia

“…This course of action includes the example in Western countries of farmers forming cooperatives to exert countervailing power against powerful buyers and suppliers in the agricultural sector (Schneiberg, King, and Smith ). There has been considerable interest in the potential for developing these larger scale cooperatives in developing countries (O'Brien, Banwart, and Cook ). Women's cooperatives have played a major role in the emergence of these organizational forms (International Year of Cooperatives Blog ).…”

Placing Rwanda’s agriculture boom: trust, women empowerment and policy impact in maize agricultural cooperatives

“…One goal of cooperative development projects in Sub-Saharan Africa is to provide countervailing power for farmer-members vis-à-vis input suppliers and processorssomething they share with cooperatives in the developed world. Countervailing power eventually provides for vertical integration into the value chain, whereby cooperatives begin to operate processing facilities themselves (Meador et al 2016;O'Brien et al 2013). These emerging cooperatives also share the need to develop and maintain social capital among their members to induce them to adopt new agricultural technologies as well as invest in long-term capitalization projects.…”