Vegetable and fruit markets in Ethiopia are not well developed. The actors involved are too many and the chain is lengthy, without significant value additions in each channel. The time or input required per unit of output exchanged and the cost involved in transferring the products from the producer to the final consumer is assumed to be very high. The technical and economic efficiency of marketing is very low.
The role of brokers is often raised; they are important given the dispersed and small-scale production (millions of farmers produce diverse and small quantity of products, at times farmers produce different varieties of the same crop) and the lack of information between producer and traders. Brokers assemble the products of many smallholders, before they reach the wholesaler; they use the information in the central market to fix the farm gate prices, never to the advantage of the producers. Wholesalers of vegetables and fruits fix the wholesale prices and the retailers adjust the prices based on the whole prices when they sell them to consumers. This is in a nutshell how markets of vegetables and fruits perform in Ethiopia.
Cooperative marketing is raised in the light of maximizing linkages between producers and traders, particularly the wholesalers, in minimizing the role of brokers. Cooperatives could play an important role in creating linkages between producers and wholesalers by bulking and sorting the produce of many hundreds, if not thousands. Cooperatives will increase the negotiating power of members.
Cooperative societies also play an important role in inputs supply like improved seeds/seedlings, fertilizers and chemicals, loan and market information provision to members. They could play an important role in promoting quality products, through provision of improved seeds and seedlings to their members, and following proper harvesting and post-harvest practices. There are good and bad examples of cooperative societies. The successful ones have storage facilities of their own, directly supply to wholesalers in the central market, offer fair prices to members (based on the quality of their products), have proper financial and property management procedures and generate adequate capital to ensure their growth. Bad ones lack many of the facilities which successful cooperatives have; storage facilities, working capital, and proper financial management, just to mention a few.
The Ocholo lante fruit cooperatives in SNNPRS is an example of a successful cooperative. The major gaps noted during our recent visit were its too small fruit store and shaky financial management. The latter could be an entry point for the LIVES project. The Omo lante cooperative was another successful cooperative where banana is stored before it is shipped to the central market.
It is important to note that cooperatives should be seen as business organizations. This is important to overcome the negative picture of the past that was associated with cooperative societies and to ensure their financial sustainability. While in the past cooperative societies were often seen as part of the state, cooperatives today should be organized by members with limited interference from the government. The government should support cooperatives to be independent business entities.
During a recent visit to SPNNR, we got the impression that some local government offices were going beyond just providing support to establish and strengthen cooperatives to actually controlling or supervising such cooperatives. It is vital that relationships between local offices and local cooperatives are defined and implemented in line with the 147/1998 proclamation and the corresponding regional proclamations which favour provision of support by offices, rather than control.
Cooperatives could be established as long as they have adequate (although we do not have a precise definition of what ‘adequate’ means) members, producers and suppliers of the similar products. Cooperative societies do not work everywhere and at all times. It is important to highlight the key role and importance of cooperatives and farmers should see the reason for establishing them. LIVES could play an important role in strengthening weak cooperatives and establishing new ones, by proving capacity building to selected (potential) members and experts, where they are appropriate.
The legal framework for establishing marketing cooperatives and the organization for establishing and strengthening thereof, the promotion office, are present.
Contributed by Fitsum Hagos (Ph.D), Economist at IWMI/LIVES
