Mekelle University The School of Graduate Studies Faculty of Dry land Agriculture and Natural Resources Evaluation on Grain Marketing Efficiency of Merkeb Multipurpose Farmers’ Cooperatives Union By Seid Ahmed Siraj A Thesis Submitted in Partial Fulfillment of the Requirements for The Master of Science Degree In Cooperative Marketing Advisor G. Veerakumaran (PhD) Mekelle March 2008 Biography The author was born in July 14, 1961 in Dessie. He attended elementary school at Muslims' public School Dessie. He completed his secondary education at W/o Sihin Comprehensive Senior Secondary School. He joined the Addis Ababa University Faculty of Social Sciences, where he studied Applied Sociology and graduated with B.A. degree in 1983. After completing the 1st degree education, he assigned to work for the Ministry of Labor and Social Affaires at different positions for the Bale Administrative Region Department of Labor and Social Affairs. Since 1993 _ 1995, he transferred to work for the Amhara Region Bureau of Labor and Social Affairs. From 1996 – 2006 he joined the Commission for Sustainable Agriculture and Environmental Rehabilitation for the Amhara Region where he assigned to work at the capacity of senior socio economist The author in his professional carrier assigned to accomplish various tasks, the major ones include: he participated in the study for the Regional Conservation Strategy. He joined the Kobo – Girana Valley Development Study Project in 1996 to undertake the feasibility study finalization and program formulation report. He participated in a team organized at regional level to undertake a Household Level Socioeconomic Baseline Survey for 56 woredas of the Amhara Region. Further he works as a team leader to accomplish a Regional Inventory of Irrigation Land and Water Resources covering all woredas of the Amhara Region He joined the School of Graduate Studies at Mekelle University in 2006 and has studied for Msc.Degree in Cooperative Marketing. The author is married and has two sons and one daughter. Abstract Evaluation on Grain Marketing Efficiency of Merkeb Multipurpose Farmers’ Cooperatives Union and the Affiliates By Seid Ahmed Siraj. B.A. in Applied Sociology Advisors: G.Veerakumaran PhD The Ethiopian farmer in its marketing tradition usually inflicted by different negative outcomes of market particularly lack of bargaining power and internal and external pressures to sell his products immediately after harvesting season while massive supply of grain use to bring to the market. The cooperative grain marketing activities in the country is the newly emerging phenomenon. By now it is following a growing trend and affluent everywhere. The research concentrated on the evaluation of the efficiency and performance of Merkeb Multipurpose farmer's cooperatives union and affiliates in the area of grain marketing. The union has 56 affiliated primary cooperatives having 106,574 individual members being one of the largest cooperative unions in the Amhara Region. This evaluation has been done in terms of operational and pricing efficiency, which are the common parameters of efficiency measurement for marketing. The operational efficiency of the union and affiliates as disclosed by the survey results is found at its lower level than the expected. They are not well accessed to the individual members where as their competent traders use to penetrate the entire rural areas through establishing grain assembling sites. The storages under the affiliated cooperatives are not well organized and managed. They are unoccupied most of the time in the year after selling the grain while depreciating every year exposing the cooperatives for continuous losses.The technical efficiency of traders is by far better than the organized cooperative system. They hold the upper hand and able to attract farmers through provisions of interest free loans for immediate money demands, forwarding the prevailing market prices of grain. They could purchase more than 70 per cent of the marketed grain. Farmers are hesitating to work with cooperatives and more than 30 per cent dissatisfied with the marketing methods of cooperatives. Traders are benefiting from the marketing margins of grain trades through acquiring 18.06 per cent 0f marketing margin (70.3 per cent) from maize crop in the 2003/04. The trend was reverted in 2004/05 where the share of the union improved to be 11.4 from 4.86 or (from18.9 to 66.6 per cent.). Regardless of this improvement, the union by now withdraws itself from grain marketing fearing the VAT registration. Yet, grain marketing should be the priority area of the union and affiliates since they are the organizations of farmers whose interest is improving the bargaining power in the grain marketing system. As per the results of the survey all common problems of cooperative societies are also observed in the union and the affiliates such as poor management, ineffective execution of various functions, corruption and negligence of responsibilities of the cooperative functions. As far as cooperatives are new forms of farmers’ organization in the rural Ethiopia, they lack the required capacity to promote the functions of marketing and even the management of cooperative organizations. It is therefore necessary to take immence intervention in the area of capacity building, provision of inputs, and continous awerness creation among members to remove the misconception about cooperative societies that developed from the previous socialist policies of the military government. ii Declaration This is to certify that this thesis entitled “Evaluation on Grain Marketing Efficiency of Merkeb Multipurpose Farmer’s Cooperatives Union” submitted in partial fulfillment of the requirements for the award of the Degree of M.sc. in Cooperative Marketing to the School of Graduate Studies, Mekelle University, through the Department of Cooperatives, done by Seid Ahmed Siraj, Id.No.FDA/GR20/98 is an authentic work carried out by him under my guidance. The issue embodied in this project work has not been submitted earlier for award of any degree or diploma to the best of my knowledge and belief. Name of the student: Seid Ahmed Siraj Signature & date ____ ___________ Name of the supervisor Dr G.Veerakumaran Signature & date _____ _______ iii Table of Contents Biography ...................................................................................................................................i Abstract .....................................................................................................................................ii Acknowledgement.....................................................................................................................v List of Tables............................................................................................................................vi List of figures .........................................................................................................................viii Acronyms and Abbreviation...................................................................................................ix Defintions of concepts and key terms ....................................................................................xi Chapter 1: Introduction...........................................................................................................1 1.1. General..........................................................................................................1 1.2. Statement of the Problem ...........................................................................4 1.3. Purpose of the Study...................................................................................6 1.5. Objectives of the Research.........................................................................8 Chapter 2: Literature Review .................................................................................................9 2.1. Introduction....................................................................................................9 2.2. Grain production ...........................................................................................9 2.3. Grain Marketing, Policies and Policy Changes........................................17 2.4. Summary of literature ................................................................................38 Chapter 3: Materials and Methods.......................................................................................40 3.1. Introduction..................................................................................................40 3.2. Methods Applied.........................................................................................41 3.3. Materials and Manpower ...........................................................................51 3.4. Limitations ...................................................................................................52 Chapter 4: Results and Discussions ......................................................................................53 4.1. Introduction..................................................................................................53 4.2. Analysis and Interpretation ........................................................................54 5. Conclusions and Recommendations ...............................................................................118 5.1. Conclusions...............................................................................................118 5.2. Recommendations