COOPERATIVES FOR WHOM? 51
decreases with the amount of land: very large farm households (holding more than 14 hectares) are less likely to participate.3
Cooperative Exclusiveness
The overall low participation in cooperatives may also be driven by their reluctance to include all potential members. As discussed earlier, inclusive membership implies two potentially opposing effects: (1) economies of scale in marketing surpluses and procuring inputs and (2) the offsetting increases in coordination costs that result from an increase in the number of members. Coordination costs may be particularly significant if increased membership is directly correlated with growing heterogeneity and divergent interests among members concerning the cooperative’s operations.
In Table 4.3, we report on cooperative-level indicators of inclusiveness. We find that, although most cooperatives declare that their membership is open to all individuals, all of them condition membership on the fulfillment of particular criteria. For instance, 87 percent of the organizations only accept members living in the same kebele, a criterion that may be intended as a way of reducing monitoring costs among members. Surprisingly, asset ownership is not often cited as a primary criterion. But as these cooperatives are all mainly linked to agriculture, and most households control at least some land, an asset criterion would not be a discriminant in most cases. A more constraining criterion may be that all members must buy a share of the cooperative, which costs on average 45 birr (US$4.95) but can reach 1,000 birr (US$110.00).4
We investigate the potential effect of these membership criteria on actual membership structure in Table 4.4.5 Column (1) shows a positive rela- tionship between both the kebele and the age criteria and the total number of members in the organization (expressed in log values). However, an oppo- site effect is found with respect to the financial criterion. In column (2) we replace the financial criterion with the actual price of the cooperative share. Results are clearly robust, indicating that an increase of 1 birr (US$0.11) in the price of a cooperative share is typically associated with a 0.4 percent decrease in the size of the organization. Columns (3) and (4) report similar
3 Such “middle-class effects” are often observed in the collective action literature. See, for
example, Weinberger and Juttin (2001). 4 Data limitations prevent us from relating cooperative membership fees (cooperative-level
dataset) to the household decision to join the organization (household-level dataset). 5 Note that the reported coefficients are likely subject to various endogeneity biases and should only be interpreted as correlates.
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