Effect of Cooperative Farming Society on Ginger Marketing in Makurdi Local Government Area of Benue State
Chapter One
Research Objectives
The main purpose of the study is to assess the role that co-operatives play in the development of ginger farmers with respect to ginger marketing in Benue state. The study has been guided by the following specific objectives:
- To examine the performance indicators of ginger farmers participating in co-operativesand compare them to farmers not participating in co-operatives.
- To identify the types of transaction costs ginger farmers face and to determine whether co-operative participation has any positive effect in minimising these costs.
- To identify key farmer co-operative constraints and opportunities, and make possible policy recommendations that could help in promoting the ginger sub- sector through farmer co-operatives.
CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
The main objective of this study is to assess the role of co-operatives in ginger production and marketing activities in Benue state. In order to analyse this role, the international experience with co-operative development and the role of these forms of horizontal co- ordination in assisting farmers’ access to input and output markets as well as credit markets have to be studied. The purpose of this chapter therefore is to present a review of the international experience on the role played by co-operatives in ginger production and in the broader context of agricultural development as documented in secondary literature. Empirical studies on the role of co-operatives and their challenges are also presented in this chapter.
OVERVIEW OF ISSUES CONCERNING CO-OPERATIVES
Defining co-operatives
The International Co-operative Association (1995) defines a co-operative as an autonomous association of people united voluntarily to meet their common economic, social and cultural needs as well as aspirations through a jointly-owned and democratically-controlled enterprise. The definition of co-operatives implies that firstly, they are formed by groups of people who have a specified common need or problem. Secondly, the organisation is formed freely by members after contributing to its assets. Thirdly, the organisation is formed and governed democratically so as to achieve desired objectives. Fourthly and lastly, the organisation is an independent enterprise promoted, owned and controlled by its members to meet their needs.
According to Galor (2003:1), co-operatives are economic enterprises that are initiated by their members and belong entirely to their members. These enterprises are formed with the intention of providing the best possible services at the lowest possible cost to their members when markets fail to provide required goods and services at affordable prices and acceptable quality.
Co-operatives can be formed in any sector of the economy and they vary greatly in terms of size and scale with regard to the functions they perform (Rondot & Collion, 2001:2). They can operate at village level, regional and even national levels. Like all forms of businesses, co-operatives are also guided by a set of principles that were first set out by the Rochdale Society of Equitable pioneers in 1844 (Ortmann & King, 2007a:41; Rheingold 2008:2). These principles are universally applicable to all co-operatives.
Co-operatives differ from other organisations in the sense that profit is returned as benefits, depending on the type and structure of the co-operative (Suber, 2005:5). Member benefits are relative to the amount that a member utilises the co-operative services. Generally, benefits include quality supplies at discount rates, increased market power; a share of the earnings relative to the percent of business performed with the co- operative as well as increased economic activity within the local community.
History of co-operatives
According to Shiferaw et al. (2006:5), farmer co-operatives were historically introduced in Sub-Saharan Africa (SSA) during the colonial period for promoting the production of cash crops by peasant farmers. After independence, a number of governments, including donors, promoted co-operatives and other rural organisations as a potential source of decentralised grassroots participation in agricultural credit, input and commodity markets (Ortmann & King, 2007a:44). Their performances were mixed and this was attributed to technological problems and poor management. Generally, co-operatives were controlled by government hence being considered as an extended arm of government and not as institutions that can help farmers in accessing markets as well as required inputs (Satgar & Williams, 2008:5).
The political interference by governments also contributed to co-operatives’ poor performance. However, in the 1980s, the situation changed in the sense that economic liberalisation opened up new opportunities for producers to be actively involved in organisations that they owned (World Bank, 2008:154). This led to reconsideration of the role of co-operatives in development despite past failures and bitter experiences (Kodama, 2007:87).
RATIONALE FOR THE ESTABLISHMENT OF CO-OPERATIVES
Improvement in the ability of poor smallholder farmers to participate in markets is a serious challenge in most developing countries. This problem is especially acute in the SSA region, given the dominance of smallholders in the agricultural sector (Onumah, Davis, Kleih & Proctor, 2007:3). Evidence suggests that the proportion of farmers engaged in subsistence agriculture in this region is still high because of high transaction costs that inhibit them from participating in markets (Bernard, Gabre-Madhin & Taffesse, 2007:1). They lack essential inputs and improved technologies preventing them from improving their production as well as participating in markets. Development programs designed in developing countries to develop smallholder farmers are unable to do so especially at the initial stages.
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CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
A research design is defined by Borg et al. (2003) as the processes chosen by the researcher to investigate questions or assumptions with the goal of gathering relevant data. Also, Ko- thari (2004: 31) defines research design as the “conceptual structure within which research is conducted; it comprises the outline for the collection, measurement, and analysis of data.” The research design of this study is a cross-section that employed structured questionnaires collect data from smallholder ginger growers and semi-structured interviews for government officials, both carried out in August 2021. The data collection was guided by research ques- tions, objectives, and the research problem. Accordingly, both qualitative and quantitative methods were employed. Tools such as semi structured interviews of qualitative methods were used while quantitative tools such as structured questionnaire is used. Researcher has used these different tools to answer research question. The choice of these methods and tools were seen to be most appropriate tools to realise objectives of this study.
Sampling Procedure
A stratified random sampling procedure was applied using farmers from the central and northern parts of Benue state. As mentioned, these parts of the country were purposively selected because they have a higher percentage of smallholder farmers. Moreover, these areas were selected because of the existence of co-operatives with good potential, thus members from these co-operatives were used for the study. There are 386 registered smallholder farmers in Markurdi
The target population (smallholder farmers) was divided into two strata: co-operative members and non co-operative members. Farmers were then randomly selected from two lists obtained from SDB to make up a sample size of 120 farmers. The co-operative farmer list used in the sampling process included farmers from all 5 co-operatives listed in the table above. The sample size is representative of the total population of ginger farmers in Markurdi.
CHAPTER FOUR
DATA ANALYSIS AND REULTS
INTRODUCTION
This chapter presents findings of the study. It presents the descriptive analysis of the role played by co-operatives in ginger p marketing of smallholder farmers in Benue state. Characteristics of both co-operative and non co-operative farmers, their production systems, marketing systems as well as their performance indicators are presented and discussed in detail. All of these were used in the assessment of the role cooperatives in ginger production. This chapter also presents the benefits of being a co- operative member as well as the constraints experienced in farmer co-operatives which inhibit co-operative development.
CHAPTER FIVE
SUMMARY AND CONCLUSION
SUMMARY
The study was undertaken to determine the role of cooperative farming society and marketing activities in Benue state. It was a survey research whereby a sample size of 120 farmers (60 co-operative members and 60 independent farmers) was randomly selected and interviewed through a questionnaire. Data on their production and marketing activities was collected and analysed through Microsoft Excel and STATA 10. Both descriptive and econometric analyses were performed. An econometric analysis was performed to determine whether co-operatives have a positive influence in minimising transaction costs incurred by ginger farmers.
Results indicated that production systems of co-operative and non co-operative members do not significantly differ from each other. Both uses specialised ginger breeds, and have almost similar herd sizes as well as use the same feeding systems. However, farmers in co-operatives perform better in terms of production and productivity as well as sell more ginger than independent farmers. This is mainly attributed to the fact that co-operative members have regular training and extension programmes that constantly provide them with vital information required for production and marketing of ginger. Farmers sell more ginger because of the reliable market offered by co-operatives enabling them to sell both their morning and afternoon ginger, whereas independent farmers often only sell their morning ginger.
In addition, independent farmers are not efficient in the use of variable inputs in the sense that more of variable inputs are employed compared to co-operative members. Informal marketing channel was mainly used to sell farmers’ ginger because of minimal restrictions on product quality. Main market outlets used were co-operatives, traders, farm gate and local community as well as processors. Moreover, the price paid by co-operatives was 35% lower than the average price received by independent farmers which then results to lower income on the part of co-operative members compared to non co-operative members. The main benefits as indicated above include the provision of guaranteed market access as well as technical services, such as training and extension.
CONCLUSIONS
Conclusions are formulated on the basis of the extent of the role that co-operatives play in both production and ginger marketing in the case of Benue state. They are discussed in the following manner:
Role of co-operatives in production
Farmer co-operatives have made a positive contribution to the production activities of smallholder farmers. However, their contribution is not significant when comparing them to co-operatives in other countries. Results indicate that co-operative farmers produce slightly more ginger than independent farmers and this can be attributed to an improvement in access to training and extension services. Further, co-operative farmers use more ginger breeds for production. Training provided may have contributed to a slight improvement in farm management skills and animal husbandry practices of farmers because it is designed according to the specific needs of farmers. Although herd sizes of co-operative and independent farmers are not significantly different, some farmers reported to have acquired more animals after being a co-operative member.
Briefly, cooperatives have played a positive role in the provision of inputs, although farmers could not access all the required inputs through co-operatives attributed to challenges co-operatives are faced with. Farmers are still not in a better position to access credit to improve their production activities as well as to invest in improved ginger technology. Apart from the use of AI for breeding, aluminium, ginger cans and buckets have been introduced by co-operatives to enable proper ginger handling and transportation. Majority of co-operative farmers have adopted the use of aluminium buckets compared to independent farmers who use plastic containers for ginger handling and transportation.
Role of co-operatives in marketing
From the results presented in Chapter 4 and Chapter 5, co-operatives have made a positive contribution to the marketing activities of farmers in Benue state. However, their contribution to marketing is impaired by the challenges that co-operatives are faced with. Currently, co-operatives in Benue state do not offer significant benefits to farmers compared to co-operatives in other countries. In the case of Benue state, co-operatives have improved the amount of ginger sold by farmers, improved the regular flow of income as well lowered transaction costs incurred. Moreover, losses incurred are now lower for farmers because they can now sell both their morning and afternoon ginger, made possible by the shorter distances they have to travel in order to sell their ginger. Nevertheless, the price offered by co-operatives is very low and, on average, the price attained by independent farmers is 35% higher than price offered by co-operatives. This puts independent farmers at an advantageous position because the enterprise is profitable regardless of whether they are in a co-operative.
RECOMMENDATIONS
Based on the results of the study, the following recommendations are made for the improvement of smallholder production, marketing and the improvement of co-operatives.
The success of ginger farming and farmer co-operatives depends on four factors, namely the provision of technical inputs, institutional support, improvement in government policies and socio economic initiatives; which all influence the success of ginger farming and decisions to expand and improve ginger operations. Therefore, there is a need for support programs by government and all stakeholders involved that will help to motivate individual farmers and strengthen co-operatives for better promotion of production and marketing of smallholder farmers. This includes a more supportive policy environment to reduce obstacles inhibiting the effective formation and management of co- operatives, infrastructure development, access to financial and credit services, improvement of markets, and provision of effective training and extension to provide more extensive and dynamic opportunities for ginger development in Benue state. This will positively contribute to reducing the high demand of ginger that prevails in the country and enable co-operatives to diversify their operations, which in turn will facilitate their effectiveness and sustainability.
In addition, there is a shortage in ginger supply to co-operatives because the quantity of ginger collected is small as well as the membership base. This prevents further processing of ginger since the demand for raw ginger is far too high. There is a need to expand the capacity of ginger collection centres by improving the membership base, increasing the price per bag of ginger or providing price incentives considering that low price promotes free riding by farmers. With an increase in the number of ginger collection centres, the volume of ginger collected and processed will also increase. Co-operatives with very few members never achieve their goal of becoming a proficient tool for development. Co-operatives’ effectiveness is constrained by organisational problems, such as free riding, a lack of commitment and participation, low managerial capacities and a lack of trust. Hence, there is a need for capacity building and member training to strengthen co- operative functioning and internal structure. The improvement of management capabilities and skills of co-operative members are essential for the development and sustainability of co-operatives. Further, trained and experienced leaders will be in a better position to solve arising problems to enable better performance of the co-operatives.
Policy recommendations
Co-operatives have a smaller membership base and they are not effective in promoting ginger production and marketing of smallholder farmers. Therefore, complementary institutions need to be designed to address the specific needs of the smallest farmers. This will motivate more farmers to join co-operatives and hence improve their membership base.
Smallholder farmers are receiving low prices for their products, which is attributed to the prevailing marketing system in the country. This discourages investments in ginger production and quality improvement. Therefore, there is a need for a pricing policy improvement which will incentivise farmers to produce and sell more as well as invest in quality improvement.
One of the main constraints cited by most farmers was inadequate land for production purposes. Farmers are unable to grow their own feeds and herd size improvement is restricted, which in turn limits ginger production. Therefore, there is a need to provide farmers with more land through policy efforts. This will improve ginger production in the country.
References
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