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Big is efficient : evidence from agricultural cooperatives in Ethiopia

(2019) AGRICULTURAL ECONOMICS. 50(5). p.555-566
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Abstract
In Ethiopia, there is a renewed interest in agricultural cooperatives as an institutional tool to improve the welfare of smallholder farmers. One of the pathways through which cooperatives benefit their members is scale economies. However, the establishment of cooperatives in Ethiopia seems to pay little attention to the size of the organizations. This article aims at investigating the effect of size on cost efficiency of agricultural cooperatives. More specifically, the purpose is to examine whether a single cooperative can serve a given number of farmers at a lower cost than two or more smaller cooperatives could. We employ the concept of cost subadditivity to compare the cost efficiency of large versus small cooperatives, and by extension unilateral actions. We estimate a flexible production technology using cross-sectional cooperative-level data. Findings show that costs would drop by 78% to 181% if farmers join hands in relatively large rather than small cooperatives.
Keywords
TECHNOLOGY ADOPTION, COST FUNCTION, PERFORMANCE, MEMBERSHIP, ECONOMIES, SCALE, SUBADDITIVITY, SMALLHOLDERS, RETURNS, IMPACTS, Agricultural cooperatives, cost efficiency, cost subadditivity, Ethiopia, scale economies, J54, O13, Q13

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Citation

Please use this url to cite or link to this publication:

MLA
Gezahegn, Tafesse W., et al. “Big Is Efficient : Evidence from Agricultural Cooperatives in Ethiopia.” AGRICULTURAL ECONOMICS, vol. 50, no. 5, 2019, pp. 555–66.
APA
Gezahegn, T. W., Van Passel, S., Berhanu, T., D’Haese, M., & Maertens, M. (2019). Big is efficient : evidence from agricultural cooperatives in Ethiopia. AGRICULTURAL ECONOMICS, 50(5), 555–566.
Chicago author-date
Gezahegn, Tafesse W, Steven Van Passel, Tekeste Berhanu, Marijke D’Haese, and Miet Maertens. 2019. “Big Is Efficient : Evidence from Agricultural Cooperatives in Ethiopia.” AGRICULTURAL ECONOMICS 50 (5): 555–66.
Chicago author-date (all authors)
Gezahegn, Tafesse W, Steven Van Passel, Tekeste Berhanu, Marijke D’Haese, and Miet Maertens. 2019. “Big Is Efficient : Evidence from Agricultural Cooperatives in Ethiopia.” AGRICULTURAL ECONOMICS 50 (5): 555–566.
Vancouver
1.
Gezahegn TW, Van Passel S, Berhanu T, D’Haese M, Maertens M. Big is efficient : evidence from agricultural cooperatives in Ethiopia. AGRICULTURAL ECONOMICS. 2019;50(5):555–66.
IEEE
[1]
T. W. Gezahegn, S. Van Passel, T. Berhanu, M. D’Haese, and M. Maertens, “Big is efficient : evidence from agricultural cooperatives in Ethiopia,” AGRICULTURAL ECONOMICS, vol. 50, no. 5, pp. 555–566, 2019.
@article{8626119,
  abstract     = {In Ethiopia, there is a renewed interest in agricultural cooperatives as an institutional tool to improve the welfare of smallholder farmers. One of the pathways through which cooperatives benefit their members is scale economies. However, the establishment of cooperatives in Ethiopia seems to pay little attention to the size of the organizations. This article aims at investigating the effect of size on cost efficiency of agricultural cooperatives. More specifically, the purpose is to examine whether a single cooperative can serve a given number of farmers at a lower cost than two or more smaller cooperatives could. We employ the concept of cost subadditivity to compare the cost efficiency of large versus small cooperatives, and by extension unilateral actions. We estimate a flexible production technology using cross-sectional cooperative-level data. Findings show that costs would drop by 78% to 181% if farmers join hands in relatively large rather than small cooperatives.},
  author       = {Gezahegn, Tafesse W and Van Passel, Steven and Berhanu, Tekeste and D'Haese, Marijke and Maertens, Miet},
  issn         = {0169-5150},
  journal      = {AGRICULTURAL ECONOMICS},
  keywords     = {TECHNOLOGY ADOPTION,COST FUNCTION,PERFORMANCE,MEMBERSHIP,ECONOMIES,SCALE,SUBADDITIVITY,SMALLHOLDERS,RETURNS,IMPACTS,Agricultural cooperatives,cost efficiency,cost subadditivity,Ethiopia,scale economies,J54,O13,Q13},
  language     = {eng},
  number       = {5},
  pages        = {555--566},
  title        = {Big is efficient : evidence from agricultural cooperatives in Ethiopia},
  url          = {http://dx.doi.org/10.1111/agec.12509},
  volume       = {50},
  year         = {2019},
}

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