Participation and commercialization in producer cooperatives: Insights on the role of cooperative functioning and equity strategies

Abstract

AbstractIn sub‐Saharan Africa, there are growing calls for policy reforms to revive the farmer cooperative movement. However, questions remain over whether farmer participation in agricultural cooperatives brings the desired innovation for markets and commercialization. This study uses a sample of 206 farmers from northern Uganda to examine what drives farmer participation and commercialization among members of groundnut producer cooperatives. Results from a two‐stage Heckman regression reveal that cooperative functioning in the form of hiring equipment to farmers, value addition, farmer training, and product quality assessment drives farmer participation in cooperative business. The study also shows that equity strategies, notably through subscription fees and farm‐inputs supply negatively impact commercialization among cooperative participant farmers. This study deepens the literature on cooperatives pinpointing the role of cooperative services in farmer participation and how stringent equity strategies reduce farmer commercialization among cooperative participants. We call for policy interventions that prioritize capacity building of producer cooperatives for improved functioning and better provision of services. This approach will enable these cooperatives to be effectively harnessed for market innovation.