The number of agricultural cooperatives increased quickly in Ethiopia since the 1990s. While many papers studied the impact of membership of Ethiopian cooperatives, not much is known on their performance. This study takes a cooperative-level perspective which is unique in an African context. It compares the economic performance proxied by sales revenue and profit of a wide range of agricultural cooperatives in northern Ethiopia. Data were collected from 511 agricultural cooperatives in 12 districts of Tigray. The contributing factors of the performance are analyzed with Ordinary Least Squares regression (OLS) and Heckman selection models. Our results underscore the importance of membership size, total assets, presence of conflict among members, and union membership. Chairperson characteristics and the internal organization of a cooperative seem to be less correlated to performance.

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In Ethiopia, there is a renewed interest in agricultural cooperatives as an institutional tool to improve the welfare of smallholder farmers. One of the pathways through which cooperatives benefit their members is scale economies. However, the establishment of cooperatives in Ethiopia seems to pay little attention to the size of the organizations. This paper aims at This article is protected by copyright. All rights reserved. 2 investigating the effect of size on cost efficiency of agricultural cooperatives. More specifically, the purpose is to examine whether a single cooperative can serve a given number of farmers at a lower cost than two or more smaller cooperatives could. We employ the concept of cost subadditivity to compare the cost efficiency of large versus small cooperatives, and by extension unilateral actions. We estimate a flexible production technology using cross-sectional cooperative-level data. Findings show that costs would drop by 78 to 181% if farmers join hands in relatively large rather than small cooperatives.

The wide array of services provided by agricultural cooperatives for their members is often not considered in academic studies. Addressing this gap in the literature, our paper explores the wide array of services provided by agricultural cooperatives and how these extend beyond those they were initially intended to provide. We study the extent and characteristics of service portfolios from 511 agricultural cooperatives in the Tigray region of Ethiopia. Results from two‐limit Tobit models confirm that government and NGO‐initiated cooperatives have a wide service portfolio compared to member‐initiated cooperatives. In many of the studied cooperatives, the services they provide and their portfolios are more diverse than expected. Cooperatives seem to go beyond their focal areas of intervention. Also, those cooperatives that are more outward‐oriented and where the chair has contact with other cooperatives or businesses, have a wider service portfolio. These results may help to explain the mixed findings on the impact of cooperative membership.

The cooperative landscape in Ethiopia is very heterogeneous with a mixture of remains of the pre-1991 government-controlled system and new post-1991 bottom-up collective action initiatives. This heterogeneity, coupled with a large growth in the number of cooperatives in the country, offers an interesting perspective to study the determinants of the (in)efficiency of cooperatives. In this paper, we analyze the performance of Ethiopian agricultural cooperatives, focusing on the degree of technical (in)efficiency and its determinants. We use the stochastic frontier approach in which we account for heteroskedasticity and the monotonicity of production functions, presenting a methodological improvement with respect to previous technical efficiency studies. Results show that community-initiated cooperatives are more efficient than member-initiated ones, and member-initiated cooperatives are more efficient than government-initiated ones. Cooperatives with a higher degree of heterogeneity in members' participation are found to be less efficient, while cooperatives that have paid employees are more efficient. Besides, results show that cooperatives in Ethiopia function more efficiently if they incentivize committee members through monetary compensation.