Economic impact of dairy cooperative membership in Machakel District, North Western Ethiopia

Abstract

The emergence of agricultural cooperatives is widely seen as a crucial institutional structure that can help smallholder farmers in developing countries overcome the limitations that prevent them from fully benefiting from opportunities in agricultural production and marketing. However, there are limited studies in measuring the economic contribution of dairy cooperatives for member households. Thus, this study was done to examine the economic impact of dairy cooperative membership in Machakel District. A multi-stage sampling technique was used to select the sample households. Data were collected from 266 randomly selected households through an interview schedule. In addition, 4 focus group discussions and 10 key informant interviews were held to collect primary data. An endogenous switching regression model was applied to estimate the treatment effect by controlling selection bias and unobserved factors. The finding indicates, being a member of dairy cooperative increases household income by over 9% milk production by almost 70%, and milk productivity by over 21 percent. The study concluded that dairy cooperatives can be efficient in fostering the economic welfare of farmers with relatively higher income, milk production and milk productivity. Therefore, stakeholders should support dairy cooperatives to make them more attractive and sustainable for farmers.