Impacts of Collective Action on Smallholders' Commercialisation: Evidence from Dairy in Ethiopia

The impacts of collective action on smallholders' commercialisation are the subject of a heated global debate. This study aims at bringing some empirical evidence into this debate. To do so we collected a unique set of bio-economic data, in 2003 and 2006, comprising information from 50 cooperative farmers and 50 individual farmers located within the same milk-shed in proximity of Addis Ababa. This dataset allowed comparing commercial performance of individual and cooperative dairy farmers, across 2003 and 2006. The empirical findings obtained with an adapted difference in difference analysis suggest that dairy cooperative farmers outperform the otherwise similar individual producers in terms of quantitative performance (market access, herd size and productivity), but also that cooperatives have an overall negative impact on milk quality (fat and protein content) and safety (bacteria contamination) at the farm gate. Finally, between 2003 and 2006, cooperatives showed horizontal expansion (increased number of cooperative members and herds size), but coop-members appeared incapable to either upgrade or intensify their farming systems.