Wet coffee marketing of cooperative members and financial performance of primary cooperatives in boji chokorsa woreda, west wolega zone oromia national regional state, ethiopia

Abstract

This study was carried out to identify factors affecting the intensity of cooperative member farmers‟ wet coffee supply to their cooperatives, determine and compare marketing margins along cooperatives and traders „channels and evaluate financial performance of wet coffee marketing primary cooperatives. The study was based on the secondary data obtained from annual audit reports of the cooperatives and primary data collected from sampled cooperative member households. A random sample of 120 members was taken to collect the primary data. Financial ratios such as efficiency ratios, current ratios and profitability ratios were calculated as performance indicators. A tobit regression model was applied to identify factors affecting intensity of wet coffee supplied to cooperatives by their members. The tobit model results indicated that age of the household head, educational level, frequency of extension contact, coffee farm size, price paid by cooperatives and distance of members‟ residence from cooperatives milling station were the variables affecting intensity of wet coffee supply to cooperatives by their members significantly. The result of marketing margin analysis showed that 20% of the total gross marketing margin was added to wet coffee price when it reached cooperatives. The results of, the liquidity ratios, activity ratios and profitability ratios showed the financial performance of the cooperatives under study were below the recommended figure and almost all of the wet coffee processing and marketing cooperatives in the study area were performing their business poorly. Based on the study result, interventions like strong and sustainable cooperative extension and promotion for members to reverse the bad image of members towards cooperatives because of the past regime, providing adult education, provision of regular extension service, accessible cooperative market center, providing better price, and cooperatives plan on agricultural input supply based on the members need are recommended. Moreover, Woreda coop promotion office, Zonal cooperative promotion office, Unions and NGOs‟ should provide sustainable technical training for cooperatives technical staffs on financial planning, financial management and inventory handling issues.