CHAPTER 4 Cooperatives for Whom?


his chapter investigates the extent to which RPOs constitute an effec- tive means for reaching the rural poor. We explore the second issue presented in Chapter 1: do poorer households participate in Ethiopian cooperatives, and if not, do they nonetheless benefit indirectly from some of the cooperative’s activities?


T Determinants of Household Participation


Only 17 percent of farm households with access to a cooperative in their kebele participated in it. Several reasons may explain this low level of parti- cipation. Under the previous regime, cooperatives were used to extend strong government control to the local level and to promote socialist ideology through compulsory participation. Field observations suggest that a long pro- cess of trust recovery is required for present-day cooperatives to overcome persisting suspicion and wariness on the part of potential members. Other reasons may be linked to a household’s economic incentive or the cooperative’s exclusive membership. Table 4.1 shows responses to the question (asked of nonmember households in kebeles that have a coopera- tive): “Why did you decide not to join the cooperative?” For 59 percent of the respondents, the benefit of participation did not seem worth the effort or fee required. Another 39 percent would have participated had they been accepted. We analyze these two mechanisms below.


Household-Level Self-Exclusion


Small- and large-scale farmers tend not to participate in these organiza- tions, resulting in what might be referred to as a “middle class” participa- tion effect. As discussed in Chapter 1, this pattern of self-exclusion can be linked to a nonlinear (inverted U-shaped) relationship between the level of a household’s production and the benefit it may derive from participating in such organizations. Using the subset of kebeles with at least one cooperative,


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