Social Capital and Smallholder Farmers’ Collective action: the Case of Primary Dairy Cooperatives in West Shoa Zone, Ethiopia

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Addis Ababa University


Dairy cooperatives promote collective actions to improve smallholder farmers’ livelihoods by linking them to markets. They are social capital-based organizations aimed at increasing mutual benefit to members. Social capital enhances members’ cooperation and participation in collective actions. Despite its significant importance, far fewer studies examined social capital as farmers’ propensity to engage in collective marketing. The purpose of this study is, therefore, to construct indicators and measure the dimensions of social capital at an individual farmer level and investigate their contribution to milk market participation in dairy cooperatives. Quantitative data analysis was carried out on primary data collected in a survey of 154 dairy cooperative members. A two-stage sampling procedure was used to select the sample farmers for the study. At first stage, Extra Value Index was developed and used for selecting dairy cooperatives. The second stage involved systematic random sampling procedure for selecting every ‘nth’ farmer in each selected cooperative. Probability proportional to size was used to select sample farmers from the cooperatives. Qualitative tools were also employed to generate data that supplement the interpretation and clarification of results from the quantitative analysis. Principal component analyses were performed on data sets of dimensions of social capital in order to construct composite indicators for measuring farmers’ dimensions of social capital: structural, relational, and cognitive. The method provided single, synthetic measures for each dimensions of social capital which are reliable, valid, and consistent. The measures were also robust and exhibit constructs validity. The Seemingly Unrelated Regression analysis revealed that various demographic, socioeconomic, and institutional factors influence farmers’ dimensions of social capital. The result of the independent sample t- tests showed that women have less structural social capital than men. The result of the ANOVA test also showed that there is a relationship between gender difference in structural social capital & milk market participation. The Tobit regression revealed that there is a positive relationship between farmers’ trust and quantity of milk marketed through the cooperatives. The results from Probit & Tobit regressions also revealed that various demographic, socioeconomic, and institutional factors influence farmers’ milk market participation. Important implications of this study include (1) the study provided reliable, valid and consistent measures which can give a solid basis for a robust assessment of farmers’ dimensions of social capital;(2) investment in education system, creating enabling environment for development of local associations, promotion of cooperative through mass media, and strengthening the existing training and capacity building measures are worthy of consideration for improving farmers’ dimensions of social capital; (3) Paying attention to gender within social networks of the cooperative and to the broader context of gender differences within which social networks are forged, increasing farmers’ interactions in the cooperatives, providing continuous gender training and capacity building, reducing gender inequality in access to productive resources and services need to be considered for improving gender differences in structural social capital and milk market participation; and (4) creating conditions which generate farmers’ trust, improving the performance of the cooperative, and establishing additional milk collection centers should be aimed in order to enhance farmers’ milk market participation in dairy cooperatives. In general, the study provides valuable insights on the role of social capital as a way to enhance farmers’ market participation in dairy cooperatives & have implications for designing appropriate policies to improve farmers’ livelihoods by linking them to market through cooperatives. Keywords: social capital; collective action; dairy cooperative; market participation; Ethiopia.