Effectiveness of Cooperatives in Coffee Value Chain: An Analysis in Sasiga District of Oromia Region, Ethiopia

Abstract

Ethiopia is producing ranges of coffee varieties with unique flavors, quality and traditional organic and shade grown coffee by smallholder farmers for which actors including cooperatives are involved in adding values at each stage of the activities of the value chain. This study focused on examining the linkage between cooperatives and other actors in coffee value chain, and analyzing factors influencing the effectiveness of cooperatives in coffee value chain. The study was conducted in Sasiga district. All the five primary coffee cooperatives were selected purposively and 134 respondents were selected using PPS sampling technique. Both Primary and secondary data collection methods were used. The data was analyzed using descriptive statistics and Binary logistic regression model. The result of the descriptive statistics showed that there was strong linkage among chain actors. The Binary logistic regression model revealed that trust, technology, market information and training has statistically significant positive partial effect on the effectiveness of cooperatives in coffee value chain at P-value of less than 5% while timely delivery of products and financial support have statistical significant positive effect on the effectiveness of Cooperatives in coffee value chain at p-value of between 5%and 10%. Though the result of the descriptive statistics showed that there is strong linkage among chain actors, greater attention should be given by all stakeholders to further strengthen the linkage by minimizing the adverse effect of practices which erodes members trust and affects the effectiveness of cooperatives in coffee value chain. On top of these, the chain actors should exchange technologies and market information to increase their competitiveness. Sustained training has to be offered to cooperatives based on need assessment to enhance their technical capacity to process coffee for adding value. Similarly, coffee cooperatives financial base has to be strengthened through promoting self-financing strategies and interventions.

Key words: Coffee, Cooperative, Effectiveness, Linkage, Value chain