A Two-Step Econometric Estimation of Covariates of Side Selling: The Case of Coffee Cooperatives in Southwest Ethiopia

Abstract

Despite their apparent economic benefit to smallholder farmers, cooperatives are vulnerable to the problem of side selling. Using cross-sectional household data and Cragg’s regression model, we identified the determinants of side selling by coffee cooperative farmers in southwest Ethiopia. The bootstrapping technique was applied to extract average partial effects from the model coefficients. Certified, elder and educated farmers who have off-farm income and trust in the cooperative leadership have been found to side-sell significantly less. Nonetheless, cooperative group size and late payment favoured more side selling. Based on these findings, possible interventions are highlighted for improving cooperative members’ commitment and the performance of coffee cooperatives in the region.

Acknowledgement

The authors are grateful for The Netherlands Organization for International Cooperation in Higher Education (NUFFIC) for financing this research project. We also thank farmers, cooperative leaders, and experts in the bureau of agriculture and cooperative agencies for providing the required information. Our appreciation also goes to the two anonymous reviewers and the editors of this journal for their valuable comments. The data used in this research can be made available upon request.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. If the participation decision (w) equals 1, then the amount decision (Y) is always greater than 0.

2. Even in cases where the participation decision (w) equals 1, the amount decision (Y) can take the value of zero.

Additional information

Funding

This work was supported by the NUFFIC [NICHE-ETH-019].