The Effect of Social Networks on Smallholder Farmers’ Decision to Join Farmer-Base Seed Producer Cooperatives (FBSc): The Case of Hararghe, Oromia, Ethiopia

Abstract

The paper presents the results of analysis conducted to empirically establish the role of social network in smallholder farmers’ decision to join seed producer cooperative, in Hararghe, Oromia, Ethiopia. We used a ‘random matching within sample’ technique to generate data on social links and resources shared like information among their links. Average treatment effects were used to limit ‘non-awareness’ or ‘selection bias’ on participation rate. An econometric strategy was employed to isolate endogenous effect from correlated and contextual social network effects and analyzed by Probit model. Rainfall data was obtained from NMA for 1986–2018 years and analyzed by coefficient of variation (CV) and standardized anomalies index (Z). The result CV and Z shows intra- and inter seasonal variability of rainfall and, the severity and frequency of drought have increase which works against a single optimum seed source. Rate of membership to FBSc was 75% for exposed sub-sample against 70% for the full sample. This shows the existence of exposure bias. The size of social network, linkage with relatives and extension agents influence farmers’ decision to join FBSc and thus, the presence of endogenous effects of social networks. Thus, participation decision is more likely to be affected by characters and structure of social network. Access to off-farm income and perception on profit influences farmer participation decision where weather-indexed seed insurance can service as an effective strategy to ensure sustained membership. Therefore, any intervention in promotion of FBSc should consider the characters’ and structure of social network and emphasis on indexed-based seed insurance and climate information services as strategy to promote seed producers cooperatives.