Agroindustrialization through institutional innovation Transaction costs, cooperatives and milk-market development in the east-African highlands

Some small-holders are able to generate reliable and substantial income flows through small-scale dairy production for the local market; for others, a set of unique transaction costs hinders participation. Cooperative selling institutions are potential catalysts for mitigating these costs, stimulating entry into the market, and promoting growth in rural communities. Trends in cooperative organization in east-African dairy are evaluated. Empirical work focuses on alternative techniques for effecting participation among a representative sample of peri-urban milk producers in the Ethiopian highlands. The variables considered are a modern production practice (cross-bred cow use), a traditional production practice (indigenous-cow use), three intellectual-capital-forming variables (experience, education, and extension), and the provision of infrastructure (as measured by time to transport milk to market). A Tobit analysis of marketable surplus generates precise estimates of non-participants' 'distances' to market and their reservation levels of the covariates -measures of the inputs necessary to sustain and enhance the market. Policy implications focus on the availability of cross-bred stock and the level of market infrastructure, both of which have marked effects on participation, the velocity of transactions in the local community and, inevitably, the social returns to agroindustrialization. © 2000 Elsevier Science B.V. All rights reserved.


Issue Date:
2000-09
Publication Type:
Journal Article
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/176215
PURL Identifier:
http://purl.umn.edu/176215
Published in:
Agricultural Economics: The Journal of the International Association of Agricultural Economists, 23, 3
Page range:
279-288
Total Pages:
10
JEL Codes:
032; C12; C35




 Record created 2017-04-01, last modified 2020-10-28

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