Effects of co-operatives and contracts on rural income and production in the dairy supply chains: Evidence from Northern Ethiopia
This article (PDF) in the African Journal of Agricultural and Resource Economics (AFJARE) pays particular attention to the impact of co-operatives and contracts on dairy production and the income of dairy farmers in the local food chains in Northern Ethiopia. Farmer-induced collective action (co-operatives) or buyer-driven contracts are often in place in global agrifood chains. Their economic contribution is well recognized, although the exclusion of smallholders remains. A structured survey of 415 dairy farmers was undertaken in four districts of Northern Ethiopia. Dairy farmers largely use marketing co-operatives because the perishability and demand for a secure market for milk attracts them. Moreover, government and NGO support to build the capacity of the smallholder dairy farmers is channeled through these organisations. This association with the government and NGOs enables co-operatives to receive processing and quality control technology, which enhances buyers’ trust and confidence. The authors suggest that strengthening co-operatives may enhance and upgrade the dairy sector/chain, improve the livelihoods of smallholders, and facilitate the link to global food chains.