This paper seeks to discern the relationship between agricultural cooperatives and contract farming scheme both in the modern malt barley value chain sector in Ethiopia. It ponders over various results of secondary data sources of studies.
Despite the fact that contract farming is at its inception in Ethiopia, GTPs I and II (Growth and Transformation Plans), promotes smallholders commercialization via contract farming and agricultural cooperatives as pillar in the growth. Contract farming is an option way-out to make agricultural commercialization viable. It is an institution that eases supply of agricultural produce for firms and access for input and output market for smallholders. Currently malt barley contractual farming is widely practiced in Ethiopia (Arsi, Shoa) due to the emerging investment of multiple beer factories. Agricultural cooperatives play a significant role in harnessing smallholders and firms in the value chain of malt barley. Along the value chain of malt barley marketing mainly Assela Malt Factory, beer firms, and traders, exist. Malt barley collection from Primary Cooperatives exceeded in 2014 crop year, because of five birr premium price per quintal. However, the amount stipulated in the contract and the collection varies as evident of side selling.
Table of Contents
1. INTRODUCTION
2. LITRATURE REVIEW
2.1. Debates on Contract Farming
2.2. Drivers for contract farming
2.3. Drivers for firms
2.4. Drivers for smallholder farmers
2.5. Agricultural Cooperatives in Ethiopia
2.6. The Role of Cooperatives in malt barley Contract Farming
3. THEORETICAL BACKGROUND OF CONTRACT FARMING
3. 1. New Institutional Economics Perspectives and Contract Farming
3.2. Institution, Institutional arrangements and contract farming
3.3. Transaction Cost Theories of Contract Farming
3.4. Theory of Collective Action and Contract Farming
4. BREWERY INDUSTRY LINKED MALT BARLEY VALUE CHAIN MARKET IN ETHIOPIA AND ITS IMPACT ON SMALLHOLDES
4.1. Malting factories and breweries of malt barley value chain
4.2. Malt barley Import status
4.3. Contract farming arrangements of malt companies and breweries
4.5. Current malt barley market behaviors and actors
4.6. Public Private Partnership impact on local smallholders
5. OPPRTUNITIES AND CHALLENES OF LINKING SMALL HOLDERS WITH CONTRACT FARMING VIA COOPERATIES
5.1. Opportunities of cooperatives in linking smallholders with contract farming
5.2. Challenges of cooperatives in linking smallholders with contract farming
6. CONCLUSION AND RESEARCH GAP
Research Objectives and Focus
This paper explores the role of agricultural cooperatives in facilitating contract farming within Ethiopia’s malt barley sector. It examines how these organizations act as intermediaries to reduce transaction costs, improve input access, and enhance the bargaining power of smallholder farmers in the face of an expanding brewery industry.
- Analysis of institutional arrangements in malt barley contract farming.
- Evaluation of the role of collective action in cooperative marketing.
- Identification of key drivers and benefits for firms and smallholders.
- Assessment of opportunities and challenges in the current linkage model.
Excerpt from the Book
3.4. Theory of Collective Action and Contract Farming
Collective action refers to concerted actions of people that share a common interest, perceive that interest and act to achieve it (World Bank, 2008). Collective action can also be defined as ‘a coordinated behavior of groups toward a common interest or purpose’ (Ruef, 2010). It is a voluntary action by group to pursue shared objectives. The first systematic study of collective action was conducted by Olson (1965). In his work, the “Logic of Collective Action”, Olson made a proposition that “unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to make individuals act towards their common interest, rational, self-interested individuals will not act to achieve their common or group interest”.
According to Little and Watts (1994) contract farming does have some elements which it seems would encourage collective action. Resistance and manipulation of the terms of the contract are not always collective but individual acts. In fact some of these acts, such as the use of personal and patronage ties to have produced upgraded, actually work against collective action. Others are simply individual ways to gain a larger share that would not work collectively, for example, adding stones to increase the weight of a produce or selling the produce in the open market.
This implies that, when self-interested individuals act together for common interest, there is a possibility of arising conflict between the individual interest and the group interest. To make it more precise, the individual member’s interest in the group may not go in line with the interest of the group, and this might leaves group action difficult. Olson’s proposition had called the attentions of empirical investigation to disclose information under what conditions collective actions succeed and when they fail. Many studies on collective action indicate that the possibility of collective actions to succeed depends on how institutional arrangements coordinating them resolve ‘social dilemmas’ or problem of collective action that may hinder group action (Ostrom, 2010; Irwin and Simpson, 2013).
Summary of Chapters
1. INTRODUCTION: This chapter defines contract farming as a tool for vertical coordination and outlines the significance of integrating smallholders into the Ethiopian malt barley market.
2. LITRATURE REVIEW: This section explores the theoretical debates surrounding contract farming and identifies the primary drivers for both firms and smallholder farmers in the Ethiopian context.
3. THEORETICAL BACKGROUND OF CONTRACT FARMING: This chapter provides the conceptual framework, utilizing New Institutional Economics, Transaction Cost Theory, and the Theory of Collective Action.
4. BREWERY INDUSTRY LINKED MALT BARLEY VALUE CHAIN MARKET IN ETHIOPIA AND ITS IMPACT ON SMALLHOLDES: This chapter analyzes the current state of the malt barley value chain, the role of malting factories, and the impact of public-private partnerships on smallholders.
5. OPPRTUNITIES AND CHALLENES OF LINKING SMALL HOLDERS WITH CONTRACT FARMING VIA COOPERATIES: This section evaluates the specific advantages and institutional obstacles faced by cooperatives in bridging the gap between farmers and agribusiness firms.
6. CONCLUSION AND RESEARCH GAP: This final chapter synthesizes the findings and highlights the critical need for further research into contract enforcement and the sustainability of producer organizations.
Keywords
Contract farming, Agricultural cooperatives, Malt barley, Ethiopia, Smallholder farmers, Transaction costs, Collective action, Public Private Partnerships, Market access, Institutional arrangements, Value chain, Side selling, Agribusiness, Rural development, Supply chain.
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines the relationship between agricultural cooperatives and contract farming schemes specifically within the modern malt barley value chain in Ethiopia.
What are the primary themes discussed in the work?
The central themes include the integration of smallholders into high-value markets, the institutional role of cooperatives, transaction costs, and the effectiveness of public-private partnerships.
What is the main objective of this study?
The objective is to discern the effectiveness of agricultural cooperatives as intermediaries in contract farming, assessing their ability to overcome market barriers for smallholders.
Which scientific methodology is applied?
The study utilizes a review of secondary data sources, literature synthesis, and institutional economics frameworks to analyze performance and governance structures.
What subjects are covered in the main body?
The main body covers the theoretical foundations, the structure of the Ethiopian brewery-linked malt barley market, and the practical challenges and opportunities of cooperative-based contracting.
Which keywords best describe the document?
Key terms include contract farming, agricultural cooperatives, Ethiopia, malt barley, smallholder integration, and transaction cost economics.
How does elite capture impact cooperatives in Ethiopia?
The research notes that elite capture remains a significant issue where power imbalances persist, even when cooperatives are technically independent of governmental control.
Why is side selling considered a major challenge for cooperatives?
Side selling represents a breakdown in contract enforcement where farmers bypass cooperatives to sell directly to third-party traders, often due to payment delays or lack of clear incentive structures.
What role do breweries play in the malt barley value chain?
Breweries serve as the main drivers of the modern chain, utilizing contract farming to ensure consistent quality and quantity of barley supply while outsourcing some organizational tasks to NGOs.
- Arbeit zitieren
- Tesfa Sisay (Autor:in), 2020, Malt Barley Contract Farming and Agricultural Cooperatives in Ethiopia, München, GRIN Verlag, https://www.hausarbeiten.de/document/1161370
