The Role Of Multipurpose Farmer Cooperatives In The Supply Chain Of Wheat In Gedeb-Hasasa Woreda, Oromia Regional State, Ethiopia

Abstract

Cooperative in general and MPFCs in particular is used as key pillar in the rural development strategy of Ethiopia to address the existing malfunctioning agricultural marketing system. This research is conducted on role of MPFCs in the supply chain of Wheat in Gedeb-Hasasa Woreda, Ethiopia. The main objectives were to identify financial performance, role of MPFCs in marketing farmers output, to investigate and describe wheat marketing channel, role of cooperative in farm inputs supply, members participation and perception to the cooperative service and determinant of MPFCs involvement in marketing farmers output and factors that motivates farmers to supply their wheat to the cooperatives. To accomplish this study both primary and secondary sources that combine qualitative and quantitative data were used. Moreover, two-stage random sampling was employed to select 5 MPFCs and 160 sample on basis of statistical random sampling technique of probability proportional to size. Structured interview schedule was used to collect primary data from famer members. Moreover, semi structured interview for sample traders and focus group discussion was held with committee members and organizer. Data analysis was carried out using financial ratio analysis, descriptive statistics and econometric model. Descriptive statistics like frequency, mean, standard deviation, minimum and maximum values had been used. Furthermore, financial analysis was done using 2 years audit report to assess the financial performance of the 5 MPFCs. Besides, econometrics model called a multiple linear regression employed using STATA software version 10 to investigate factors that influence farmers to supply their wheat to the cooperatives. As financial ratio analysis shows, cooperatives under investigation were not at better financial position to undertake the output marketing and in diversifying their services to satisfy farmers demand for services. MPFCs under investigation using current ratio all except Abdi Boru were below satisfactory level on the basis of the 2009/10 audit report. While in the year 2010/11 cooperatives current ratio was showed slight improvement. Surplus ratio of the MPFCs has been insignificant based on the two years audit report under investigation. Further, leverage ratio analysis shows that cooperatives under investigation for the last two years more than 65% of their assets were financed by outsiders rather than cooperatives own worth. As the result of descriptive analysis shows, most (47.5%) of the farmers did not use cooperatives as their farm outlet. Besides, MPFCs role in the study area in purchasing the members wheat rated as poor by majority (71.25%) of sample farmers and 47.5% and 31.88% sample farmers sold their wheat to wholesalers and local market respectively. Moreover, of the total sample, 31.25% of them rented-out their land to outsiders. Accordingly, of the 13 explanatory variables access to credit, yield of wheat and educational level found to exert direct and significant impact on farmers supply of wheat while, price offered and proximity to district market were found to have negative significant influence on farmers supply of wheat to the cooperatives. Improving financial capacity, extending credit and tractor service, training and education, delivery time of farm inputs, members’ participation and saving habits of farmers, purchasing role of cooperatives, avoiding interferences, and minimizing bilateral role of traders were some of the interference areas that need to be considered by concerned stakeholders to improve the role and function of MPFCs in marketing out puts of farmers in the supply chain.