Wollega University: College of Business and Economics Department of Economics
Wollega University: College of Business and Economics Department of Economics
Wollega University: College of Business and Economics Department of Economics
FEBRUARY, 2021
NEKEMTE, ETHIOPIA
Table of Contents
ABSTRACT.................................................................................................................................................i
ACRONYMS.............................................................................................................................................iii
CHAPTER ONE..........................................................................................................................................1
INTRODUCTION.......................................................................................................................................1
1.1. Background of the study...................................................................................................................1
1.2 Statement of the study.......................................................................................................................2
1.3 Objective of the study........................................................................................................................2
1.4 Significance of the study...................................................................................................................3
1.5. Scope of the study............................................................................................................................3
1.6 organization of the study...................................................................................................................3
CHAPTER TWO.........................................................................................................................................4
LITERATURE REVIEW............................................................................................................................4
2.1. THEORETICAL REVIEW..............................................................................................................4
2.1.1 Definition of Agricultural Cooperative...........................................................................................4
2.2 Empirical review literature................................................................................................................8
CHAPTER THREE...................................................................................................................................10
METHODOLOGY OF THE STUDY.......................................................................................................10
3.1 Description of the study area...........................................................................................................10
3.2 TYPES OF DATA AND SOURCES..............................................................................................10
3.3 METHOD OF DATA COLLECTION............................................................................................11
3.4 SAMPLING TECHNIQUE.............................................................................................................11
3.5 METHOD OF DATA ANALYSIS.................................................................................................12
CHAPTER FOUR.....................................................................................................................................13
WORK AND BUDGET PLAN.................................................................................................................13
4.1 Work plan........................................................................................................................................13
4.2 Budget plan.....................................................................................................................................13
REFERENCE............................................................................................................................................15
i
ABSTRACT
The study will focus on the role of farmers’ cooperative in improving agricultural productivity.
In accomplishment of this task will be obtain data from two source of information. Those are
primary and secondary source of data will be used. The primary data will collected through
questionnaires and interviews. The secondary data will be collected from report of various
organization, federal cooperative agency, other economic journals, internet, document of Aira
office of agricultural cooperative and woreda agricultural bureau. For this the researcher use
simple random sample from total population household from 8 groups of this study area. The
sampling is random sampling method with sample size of 60 respondents. Data will be analyzed
using descriptive method to discuss the role of farmers’ cooperative in improving agricultural
productivity. Depending on the nature and the type of data gathered through questionnaire and
interviews. To analyze data the researcher will be use qualitative and quantitative of data
analysis.
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ACRONYMS
EEA: Ethiopia Economic Association
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CHAPTER ONE
INTRODUCTION
1.1. Background of the study
Ethiopia is the one of the least developed nations that depends on agricultural sector, a pillar to
its economy. the economy is highly influenced by the preference of the sector .It is contributed
the largest share of gross domestic product is around 46.6% ,absorbed huge part of labor force
and hence creating employment to more than 80%(USDA 2001). According to Ethiopia
agricultural research center report of 1998, Ethiopia is basically an agricultural country. Its
economy is agrarian with agricultural providing the major part of the material production, export
and employment's. As matter of the fact that Ethiopian's principal natural resource is the total
areas of the country. It is clear that the large segment of population between 84%-90% earn their
living from agriculture.
Agricultural have played an important role in rural community where they are encourage
democratic decision making and leadership development education. Cooperative provide
economic benefit to farm familiar though increasing stability of the Farmer sector ,also improve
market access for their productivity and strengthening Farmer position in agricultural food chain
improving farmers living condition, support's rural development and preserve the variability of
rural community in Ethiopia above 73 million individual in rural area member deprive benefits
from agricultural cooperative (USD 2004).
Agricultural cooperative is the part of dynamic environment for the nature production.
Agricultural choose manly chooses occur outside the cooperative system which has little ability
supporting the rural economy and local administration live emphasis to improve agricultural
production and productivity through cooperation (J.M.Kumar 1999).this also provide a market
for commodities produced by isolated small farms in the rural area which is collective action.
Agricultural cooperative capture the benefit of value added. In addition the cooperative are
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responsible for stimulating poor farms to make entry in to market enhance demand for standard
overall national economy, agricultural production and productivity is very poor. The agriculture
of the economy is characterized by limited use of improved input and back ward agricultural
sector has been declining at the rate of 1.2% per annual, (CSA, 2005).for the last 42year in
Ethiopia majority of people live in rural areas we need no further evidence than the over
worsening poverty situation of the rural population realizing on poor agricultural productivity.
Even worse as size of countries population increase per capital income gained from the
agricultural sector has been declining consequently the level of income is low and failed to meet
The Farmer adoption rate and preference of prompted technology has been very law. One of the
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To study contribution of farmer cooperative in improving productive capacity of
households
efficiencies in production and marketing and help to identify that factor affecting the
development of agricultural economy. This will make useful information regarding the situation
of agricultural cooperative and who need to make further agricultural cooperative on Farmer
productivity in Aira woreda. The study will have significant role in giving for those who want to
which purchase in volume, distribution Farmer supply and impact to members of cooperative in
includes; background of the study, statement of the problem, and objectives of the study,
Significance of the study, Scope of the study, limitations of the study and organization of the
study. While the second chapter includes literature review, the third chapter methodology, the
fourth charter describes time and budget plan. Then the fifth chapter will focuses on conclusions
and recommendations.
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CHAPTER TWO
LITERATURE REVIEW
2.1. THEORETICAL REVIEW
2.1.1 Definition of Agricultural Cooperative
Agricultural cooperative is defined according to different scholars in different ways. This
definition resolves around one main idea joining to help each other. Agricultural cooperative
land associate of person who have voluntary join to other to achieve common and through the
required and accepting a fair of share of the risk and benefit of under talking in which the
produce of good or consumer of good and service that wishes to band together to achieve
competitive advantage of large site marketing or places such groups may form agricultural
cooperative in which production marketing or purchasing facilities are jointly one end and are
operated many to provide a services to members rather than make profit farmers tailor and other
The basic principle of cooperative societies as a farm self-help and mutual help are the
membership shall been open, not determined by religious and political or other considerations
irrelevant to the objective of the society, that the affairs of the society be controlled in a
democratic manner on the basis of one man one vote, not in proportion to capital. That interest
on capital be fixed, and the member benefit from the activity of the society in proportion to the
removing disadvantage or achieve the desirable objective, and regarding a willing ness and
The primary proposes is to make a profit for its patron’s use of the cooperative, not for its
investor. The member of cooperative serves themselves. A contractual agreement between the
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cooperative and patrons requires that all margin above the cost of production to their
different set of resources and perhaps gals. The cooperative involves farmers an elected board of
director, hired management, organized labor, government officials, bankers, and other may be
Agricultural cooperative is a business owned and control by the people who use its service. The
finance and operate the business or service for their mutual benefit of working together they can
reach an objective that would attainable. Agricultural cooperative are member ship based on
organization owned by their “users " people to be provided direction facilities. Agricultural
cooperative. Although agricultural cooperative create the ability for the supply of required
agricultural input's that production of commodity done timely to enhance production. They also
provide the insured for commodity's produced by isolated small farmers to the rural area. In
addition agricultural cooperative are responsible for stimulating enhancing demand for standard
As Barton (1998) puts its agricultural cooperative is user controlled business that distributes
benefit on the basis use which indicate the distributing concept and principle use, principle that
person who owned and finance agricultural cooperative is by those who use cooperative. Their
control principle that controlled agricultural cooperative is those who use cooperative. The user
benefits principle, benefit that agricultural cooperative distributed user on the basic. Theirs
service member receive benefit of economic social value because other association with
agricultural business .benefit of economic value to stock holder are numerous including the
product ,service and Price variable person who by from or sell to the business. The distribution
of income to participating the farmer of patron ages .they also include is lasted capital paid to
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owner water paid to employee according to profit sharing plan since members are those who
organized and controlled agricultural cooperative benefit are primary intended. Other may share
in the benefit also share the risk to the cooperative. Although there are motivation force
agricultural cooperative activities it's accepted that the primary motivation in agricultural
system. They need to be clear how their engagement will improve the performance
and profitable of agricultural cooperative and how this will lead to poverty
looked are carefully at their support has ended and its benefit to the poor are
sustained through market form action. It is important that work on sector such rural
and urban. Diner engage the network level diner have they key role strengthening
(OFLO; 2008).
Agricultural cooperative are special typeset corporation that is owned and controlled by those
who in use its service. It is state character business or organized and operated under its law to
further their mutual benefit member may finance and operate business. By working together
member any able to meet objective that would not be feasible for them to do as individual hence
the financial retrying to individual operation may be increased (L. Insur 1997).
benefit. Cooperative interest is providing service to the members at lower possible constant
together. The high possible return to meet continuing needs for found most corporates controlled
democratically on one member one basic. However some cooperative a limited proportional vote
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based on member use of the cooperative service. Returns to member equality investment usually
are limited in order to focus attention and return to members for their use the cooperative service
Cooperative is the way of life of Ethiopia and has large or long year of experience. This
cooperative may be cultural or religious that makes the population a close lie, for example, iddir,
ikub and wenifel. However a modern cooperative relative in Ethiopia was standard at the time of
Emperor Haile Selassie I in 1961. During this time the cooperative legal action was made and it
in Ethiopia started in the late 1960’s with launching of comprehensive agricultural development
until (CADU), the main reason for this degree was the increase member of unemployment, past
increase of migration from rural to urban, the increase member of student who drop out of their
education, and finally the disagreement of the military without proper compensation and pension.
The second attempt to Ward legal cooperative was in 1994, and the time was end of first 5 year
development plan. Based on evaluation of this plan, the need for cooperative form of
organization for the development of the nation was considered to be inevitable. There for the first
declared. The objective of his law was to decrease the amount of interest paid for credit, to
innovation in particular life. Nevertheless it focuses on area that can cultivate economically
importance crops. So it was unable to meet the demand all Ethiopian poor.
In 1974 Emperor Haile Selassie government fall was replaced by socialist government, and
proclaimed cooperative organization in 1978 and its proclamation number 138/1978.The main
objective of the proclamation was transform rural part of the Ethiopia agriculture to socialistic
type and have socialistic marketing relation between the rural and urban area up to 1990. At that
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time the government gave attention for the cooperative. There were 10,524 different type were
rural cooperative.
However the government intervention was beyond the level of support, so there benefit were
making harmful effect and society become reluctant even to hear and talk about the cooperative.
Cooperative in this period suffered; because they were occurred to serve other political purpose
than the purpose they were established. In this respect, the farmer regard the primary society in
this part was manifested in damaging the property of cooperative by the member themselves at
as the existing type of cooperative were not meeting the interest of farmers. Because, of bad
reputation in the past and other factors, such as lack of proper training and capital. The
Nonetheless the cooperative failed to survive the collapse of military government. The farmer
was themselves largely viewed them as the creation of the government no genus and voluntary
participation by Farmers and an individual with closed association with the ruling party managed
the cooperative.
another 2 billion on people. There is an agree need for development and agricultural
processing and marketing of agricultural product and give them to assess to market.
Many researches on food security have carried out in depth. According to caver (2003) food
security is achieved they will people all time have physical and economic access to sufficient on
the other mean avoiding hunger for all from the research. It is evidence that recorded law figures
of food in security. In 2000 Uganda and Tanzania recorded 36.9% of food security. In 1997
Kenya had owned ratio of 43.9% from either conclude that there is a close correlation between
food security or the country with their long history and large size of agricultural cooperative.
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However, the mass made possible account that small farmer on account that small farmer’s
In recent early time agricultural cooperative one of different cooperative which can help farmers
to let bitter better deal of various stages production on distribution in many country. Agricultural
farmer cooperative have significant role in great employment. It also the farm of agricultural
According to (Holo Way et al 1999) it has been responsible for introducing the exchange
economic remote rural area. The agricultural cooperative provides ready market for farmer
production and crops. But also absorbs transaction cost would other way hinder smaller farmer
for market and production integration. There are farmer producer cooperative which supply input
s and market processing of product for farmer. Freshman and workers, they include same of the
business, same are agricultural cooperative of farmer struggling to service. Although market
where policy by support being cut. Merited walzar (2001) analyzed the new generation
cooperative is us where member contribution capital in production to the produce the intended to
supply to processing cooperative. The resulting share center at the market value and in returns
have aureate from the cooperative that all value from processing Bank to the farmer in 2002 the
Agricultural cooperative also provide market for commodity they represent model of economic
that agricultural cooperative high record agricultural for democratic human value (Barraket
2002). Generally agricultural cooperative maintain which level of income marketing small
farming able to contract decent house send their children to school and provide health insurance
The NCA (2005) also argue that cooperative are formed to strength bargaining power maintain
access to cooperative market, capitalized and new market opportunity obtained needed product
and service on completive basis improve income opportunities reduce cost and market risk.
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CHAPTER THREE
The main economic activity of the area is mixed farming which includes crop production and
animal husbandry. Both donkeys and horses are used to transport materials and human beings
(Negaso Gidada).
Aira town is bounded in north by Gulliso town, in south by Lalokile town, in west by Dalle sadi
town and in east by Yubdo town.
Primary data will be collected from respondents which will be selected randomly through
distributing questionnaires and interviewing. The questionnaire will include both close ended and
unstructured which will help to get more information in detail and give freedom for interviewer
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The secondary data will be collected from different source such as book, internet and other
published documents related to the topic like agriculture and rural development office of the
woreda. Generally farmers and cooperative office of the woreda are the main source of the study
because, it can save time and cost and also can provide efficient accurate and wider information
Questionnaire will be develop in both open and closed ended questions to get consistence
On other hand, secondary data will be obtained from various sources such as AOARD at
interview will be selected by taking the small proportion of the population. Stratified random
sampling procedure will be adopted for the selection of the sample respondents from the
agricultural cooperative of the woreda. Since there 8 groups which use the farmer's agricultural
cooperative in Aira woreda. The researchers would select 3 groups, which will be selected are;
Bondawo, Ketta, and Wayu Meni. The populations of those groups of house hold are, 65, 80, and
sampling formula (Agrestic, A and finally B 2008 statically option for social sciences, 4 the
edition) the sampled house hold can be collected for each group by strata.
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PROPORTIONAL DISTRIBUTION OF SAMPLE SIZE
groups hold
1 Bondawo 65 17
2 Ketta 80 21
3 Wayu Meni 84 22
Total 3 229 60
Finally, the researchers would address 60 respondents to conduct the study.
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CHAPTER FOUR
4 Data Collection
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Flash 8GB - - 300
TOTAL - - - 4000
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REFERENCE
Barton. D (1998) what is agricultural cooperative in agricultural cooperative ed.o.cobial
Barraket (2002) Sustainable Communities Cooperative Solution for rural renewal accora
report.
Chang Ken fun .C Menegilie (2011) performance evaluation indexes system construction
CAD Fijian LIU HULIN .G.HOA (2010) performance evaluation on spread cooperative
organization of farmer.
Clover .J. Food security in sub-Saharan, Africa Security review voles 12, 213 cooperative
review 2008:
USAID Coffee cooperative help small farmers let affair trade price through fair trade
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