Structure, Institutions, and Governance in Agricultural Cooperatives: A Quantitative Analysis of Efficiency, Productivity, and Welfare Effects in Ethiopia

One of the most intensively discussed concepts in the international political debate today is the concept of sustainability. According to the Brundtland Commission, sustainability means that current generations should meet their needs without compromising the ability of future generations to meet their own needs. On the one hand, the impact of agriculture on the environment is a matter of public concern, on the other hand, agricultural growth remains a viable means of poverty reduction in sub-Saharan Africa. Growing awareness and concern about the environmental costs of agricultural production has given new impetus to increasing the use of resource-conserving technologies and farm practices that reduce production externalities.  Agricultural eco-efficiency is promoted as a means of increasing agricultural production and improving the security of food systems in response to climate change. The rationale is that, with eco-efficiency (the efficiency with which ecological resources are used to meet human needs), economic and environmental resources will be used more efficiently, enabling increased amounts of food to be produced from the same or fewer inputs. Challenges to sustainable development, such as natural resource degradation and poverty are deep-rooted problems worldwide and often more severe in developing countries where the mainstay of the economy is agriculture. Since the early years of the 21st century, academia, governments, and donors have shown renewed interest in the institutions of collective action as pathways for enhancing smallholder production to ensure economic and social development in rural areas. Being organized into agricultural cooperatives is among the alternative strategies suggested to agrarian families to overcome sustainability challenges. Ethiopia is one of the African countries where co-operatives are again in the spotlight. As part of its effort to transform the agricultural sector, the government of Ethiopia has placed large emphasis on promoting cooperatives as one of the main organizational vehicles for enhancing food security and reducing rural poverty. To tackle environmental problems as well, Ethiopia has devised a Climate-Resilient Green Economy strategy that aspires to protect the country from the adverse effects of climate change and help realize the its ambition to reach middle income status by 2025. Given the green strategy and the importance of agriculture for the country's economy, examining the role of agricultural cooperatives in meeting the objectives of improved eco-efficiency and welfare of smallholder farmers in Ethiopia is of paramount importance.