When the issue of economic growth and development of the country is raised, one has to
take into account the performance of the growth of smallholder farmers. Reducing the
challenges they are facing and utilizing their potentials can help to accelerate the
agricultural sector and economic development of the country as a whole. Agricultural
cooperatives are ideal means for self-reliance, higher productivity and promotion of
agricultural development. Therefore, the major concern of this study is empirically
analyzing the role of agricultural multipurpose cooperatives found in the Southern Zone
of Tigray Region of Ethiopia. From the five Woredas of the Southern Zone of Tigray
Region Alamata and Ofla Woredas were selected at random for the study.
Both primary and secondary data were taken for this study. A three-stage random
sampling procedure was adopted to select 10 primary agricultural multipurpose
cooperatives and a total of 208 sample respondents at the rate of 56 from Alamata and
152 from Ofla Woreda. Primary data pertaining to the year 2006/7was collected from the
selected sample respondents by using a through structured interview schedule. Of the
total respondents, about 70.209% and 29.80% were participants and non-participants of
the cooperatives agricultural input and output marketing respectively. Secondary data of
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cooperatives was also taken in to consideration to examine the performance of the input
and output marketing by the cooperatives in the Alamata and Ofla Woreda. Financial
ratios were analyzed taking the two audit year's financial data. The liquidity analysis
showed that the cooperatives under investigation were below the satisfactory rate (current
ratio of less than 2.00). The financial leverage ratio (debt ratio) showed that the
cooperatives under investigation used financial leverage (financed more of their total
asset with creditors’ fund).The profitability ratio of the cooperatives showed that the
profitability of most cooperatives improved when we compare from the first audit year to
the second audit year, except two cooperatives in Ofla Woreda (Tadesech from 25.9% in
2004 to negative 1.6% in 2007 and Higumberda from 40.8% in 2002 to negative 5.2% in
2003.
.Descriptive statistics were used to compare the explanatory variables of the participant
and non-participant sample respondents in the agricultural input and output marketing.
Testing differences between two samples were done using T-test and Chi-square test. The
comparison revealed that there is a significant difference between the two groups of
sample farmers regarding their age, education livestock ownership in TLU, share holding,
non-farm income, expenditure on agricultural input, distance of the cooperative office
from the farmer member's house, membership of the household head in other
cooperatives and price of improved seed. Probit econometric model was employed to
identify the factors influencing the participation of cooperative members in the input and
output marketing by cooperatives in the two Woreda. Fifteen explanatory variables were
included in the model of which ten variables were found to be significant. Of these, six
explanatory variables namely own land, shareholding ,distance, output price, membership
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in other cooperatives and seed price) were found to be significantly and positively
related to the participation of cooperative members in the agricultural input and output
marketing by cooperatives. Hence, it is suggested that more attention is to be given to the
human resource development of the cooperative auditors through short term and long
training programs so that to able to undertake timely audit of the cooperatives both in
terms of quality and quantity. This implies, cooperatives can pay the patronage and
capital dividend to members and minimize financial embezzlements through strong
internal control system. Moreover, professional management is becoming crucial issue
for the cooperative societies in order to run viable and profitable business that can meet
members benefit. Therefore, due attention is required for the recruitment of professional
manager