Impact of Agricultural Cooperative Membership on Households’ Welfare in South Ethiopia Region, Ethiopia

Increasing agricultural production and productivity is indispensable for improvement of household welfare. In developing countries however it is challenged by various factors including market failures. Agricultural cooperatives are among the institutional arrangements that are widely recognized for improving the market access of smallholders in developing countries and improve welfare. This study therefore aimed to assess the impact of being a member of agricultural cooperatives on smallholder household welfare in southern Ethiopia. The multistage sampling techniques were followed with a survey research design. Data were collected from 422 households. Welfare was approached with farm income and food security (household dietary diversity and food consumption scores). The average treatment on treated and untreated of farm income were 0.74 and 0.19, respectively, whereas that of dietary diversity were 1.86 and 1.5, respectively, and the food consumption scores of members and non-members were 20.88 and 5.77, respectively. The treatment effect shows that farm income increased by 7.65% for members, whereas non-member income increased by 1.87%. The average treatment effect of non-members is 5.77; that is, the food consumption score of non-members of agricultural cooperatives would be higher by 16.49% if they had joined. The study revealed that membership positively influences farm income, dietary diversity and food consumption scores. This study emphasizes the importance of promoting cooperatives to improve the welfare of smallholder households, but future research should consider other forms of cooperatives and other dimensions of welfare.