Heterogeneous Impacts Of Cooperatives On Smallholders’ Commercialization Behavior: Evidence From Ethiopia.

Abstract

This paper examines the impact of marketing cooperatives on smallholder commercialization of cereals using detailed household data in rural Ethiopia. We use the strong government role in promoting the establishment of cooperatives to justify the use of propensity score matching in order to compare households that are cooperative members to similar households in comparable areas without cooperatives. The analysis reveals that while cooperatives obtain higher prices for their members, they are not associated with a significant increase in the overall share of cereal production sold commercially by their members. However, these average results hide considerable heterogeneity in the impact across households. In particular, we find smaller farmers tend reduce their marketed output as a result of higher prices, while the opposite is true for larger farmers. JEL Classification: Q13, O12Agricultural and Food Policy, Community/Rural/Urban Development, Demand and Price Analysis, Farm Management, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Institutional and Behavioral Economics, Labor and Human Capital, Marketing, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,