Determinants of Commitment to Agricultural Cooperatives: Cashew Nuts Farmers in Benin

Abstract

Forming and using cooperatives as marketing channel is usually advised to African smallholder farmers for overcoming the constraint of market access. However, limited evidence of cooperative behavior in marketing has been observed. In this paper, we estimate a two-stage model of commitment to cooperatives by cashew nut farmers in Benin, West Africa. In the first stage, we use data on 109 non-members and 168 members and estimate a binary Logit model of farmer’s discrete choice with respect to committing to membership. In the second stage, we use the members’ data to estimate a Tobit model of the proportion of produce delivered to the cooperative, after controlling for the endogeneity of the proportion of presales. Empirical results reveal that the commitment to membership depends on the assessment of prices offered by the marketing channels, the farmer’s preferences for the specific attributes of the channels, the total farm size, and some psycho-sociological factors; the commitment to business depends on prices and transaction costs in the channels. Our findings call cooperatives for improving commitment by considering the subjective and economic reasoning of the farmers, and setting formal contracts between members and their organization.