Abstract:
The objective of the study was to identify factors affecting membership and estimating the
benefit sharing of farmers in primary coffee cooperatives with the specific objectives of
assessing if farmers get relatively more profit share while selling coffee through cooperative
market channel than other private trading channel; analyzing farmer’s membership and
identifying the underlying determinants of decision to join primary coffee cooperatives and
identifying opportunities and challenges for primary coffee cooperatives growth in the study
area. Both primary and secondary data were used for the study. The primary data for this
study were collected using semi-structured questionnaire from 216 households (154 members
of primary coffee cooperative and 62 nonmembers). In addition to that two coffee
cooperative unions, 10 suppliers, and five exporters were selected following the chain of
actors. Both descriptive and econometric methods of data analysis were employed. Binary
Logistic regression model was used to identify factors that affect coffee farmers’ cooperative
membership. The result of econometric analysis using Logistic regression model revealed that
five among the 11 explanatory variables namely, educational level, land allocated for coffee
production, awareness of farmers towards the socio economic importance of cooperatives,
experience in coffee growing and the adequacy of dividend were found to significantly
determine smallholder farmers’ decision to joining primary coffee cooperatives in the district.
The result of marketing margin analysis indicated that the two actors, unions and private
exporters received highest share of market margin 65.82% and 56.21% and profit margin of
65.95% and 60.14% respectively compared to others actor in the coffee marketing chain.
However, farmers received higher profit share (13.85%) when they sold their coffee
through cooperative marketing channels and 7.30% if they used cannel II ( private trader
channel ) From the finding, it is, therefore, recommended that regional government in
corroboration with other concerned bodies should work on improving educational status,
allocation of land, farming experience, awareness of farmers about the socio-economic
importance of cooperatives and distribution of dividend in order to encourage and attract
smallholder farmers to join primary coffee cooperatives in the district.
