Impact of Agricultural Cooperatives on Farmer's Technical Efficiency: Evidence from Haricot Bean Producers, Southern Ethiopia

The government of Ethiopia had considered cooperatives as important instruments to economically empower smallholder farmers through improving farmer’s productive efficiency. However, there is lack of empirical evidence that tackles the impact of cooperatives on farmer’s technical efficiency. Therefore, this paper investigates the impact of cooperatives on smallholders’ technical efficiency. To address the research objective, a cross-sectional data was obtained from 400 randomly selected Haricot Bean producing farm households in Burji special district, Southern Ethiopia. Stochastic Production Frontier and Propensity Score Matching (PSM) models were used to analyze the data. Our result indicates that cooperative members are more likely to be households that are literate, own land certificate, larger family size, own cell phone, and leadership experience. We also found that age of household head is positively and significantly associated with cooperative membership while distance from the town of the district reduces farmer’s cooperative membership. Our study revealed that the mean technical efficiency score of the Haricot Bean producing farm households is found to be 71.8% with a mean technical efficiency score of 74.4% and 70% for cooperative member and non-member households, respectively. Our estimation result shows that cooperative membership has a strong positive impact on smallholder’s technical efficiency. The results suggest that cooperatives can play an instrumental role in improving the technical efficiency of smallholder farmers in the study area.