Contract farming, cooperatives and challenges of side selling: malt barley value-chain development in Ethiopia

ABSTRACT

This paper presents the experience of malt barley value-chain development through cooperative-based contract farming. The descriptive and qualitative analysis used primary data collected from the actors involved and secondary data. The results indicate that side selling is a major challenge, estimated at about 30%. Promoting the role of cooperatives and avoiding side selling by addressing both farmer- and system-level issues requires considering the dynamic nature of the malt barley market, involvement of all relevant stakeholders, capacitating cooperatives rather than providing handout-type support, and promoting market-based disincentives and incentives for the misconduct and conduct of actors.

KEYWORDS:

• Environment (built and natural) – Agriculture
• Labour and livelihoods – Poverty reduction
• Sub-Saharan Africa

Acknowledgements

This work was commissioned as part of the research project “Increasing the Income of Malt Barley Farmers in Ethiopia through More Effective Cooperative Management”. The research was supported by Self Help Africa (SHA) and the US Overseas Cooperative Development Council (OCDC) through USAID’s Cooperative Development Program. This paper is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this paper are the sole responsibility of the authors and do not necessarily reflect the views of USAID or the United States.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The regulatory framework governs various aspects of the content of contracts and stipulates the role of specific public regulatory organisations in their enforcement. Contracts between unions and breweries indicate how quality and price will be assessed, how emerging disputes will be settled, which public organisations will be involved, and which public law will be considered.

2 Cooperative governance is defined as the “establishment of policies, and continuous monitoring of their proper implementation, by the members of the governing body of a cooperative/union, which includes the mechanisms put in place to balance the powers of the members (with the associated accountability), and their primary duty of enhancing the prosperity and viability of the cooperative/union”.

3 Probit and logit are appropriate for identifying the factors affecting side selling. We found that the probit model was a better fit in overall significance level and opted to use it. However, the estimated results were more or less similar.

Additional information

Funding

The research was partially funded by OCDC through a partnership agreement with Gorta-Self Help under subaward number CDP009-2016-0l from National Cooperative Business Association (NCBA) and award number 7200AA18CA00029 from US Agency for International Development (USAID).

Notes on contributors

Dawit Alemu

Dawit Alemu is an Agricultural Economist with wide experience in agricultural research and development.

Alice Guinan

Alice Guinan is a Programme Manager with extensive experience in agriculture, enterprise development, disaster risk reduction and natural resource management.

Judith Hermanson

Judith Hermanson is Research Director of the US Overseas Cooperative Development Council. She oversees a global research portfolio that seeks to link evidence both to policy and to practice in order to ensure better outcomes for cooperative members.