Agroindustrialization Through Institutional Innovation Transaction Costs, Cooperatives and Milk-Market Development in the East-African Highlands

Posted: 3 Oct 2001

See all articles by Garth J. Holloway

Garth J. Holloway

CGIAR - International Livestock Research Institute (ILRI)

Charles Nicholson

Adjunct Associate Professor; Clinical Associate Professor

Chris Delgado

International Food Policy Research Institute (IFPRI)

Steve Staal

International Livestock Research Institute (ILRI)

Simeon K. Ehui

CGIAR - International Livestock Research Institute (ILRI)

Abstract

Some small-holders are able to generate reliable and substantial income flows through small-scale dairy production for the local market; for others, a set of unique transaction costs hinders participation. Cooperative selling institutions are potential catalysts for mitigating these costs, stimulating entry into the market, and promoting growth in rural communities. Trends in cooperative organization in east-African dairy are evaluated. Empirical work focuses on alternative techniques for effecting participation among a representative sample of peri-urban milk producers in the Ethiopian highlands. The variables considered are a modern production practice (cross-bred cow use), a traditional production practice (indigenous-cow use), three intellectual-capital-forming variables (experience, education, and extension), and the provision of infrastructure (as measured by time to transport milk to market). A Tobit analysis of marketable surplus generates precise estimates of non-participants' 'distances' to market and their reservation levels of the covariates---measures of the inputs necessary to sustain and enhance the market. Policy implications focus on the availability of cross-bred stock and the level of market infrastructure, both of which have marked effects on participation, the velocity of transactions in the local community and, inevitably, the social returns to agroindustrialization.

Keywords: Agroindustrialization, Institutional innovation, Transaction costs, Cooperatives, Milk-market development

JEL Classification: 032, C12, C35

Suggested Citation

Holloway, Garth J. and Nicholson, Charles F. and Delgado, Chris and Staal, Steve and Ehui, Simeon K., Agroindustrialization Through Institutional Innovation Transaction Costs, Cooperatives and Milk-Market Development in the East-African Highlands. Available at SSRN: https://ssrn.com/abstract=250078

Garth J. Holloway (Contact Author)

CGIAR - International Livestock Research Institute (ILRI) ( email )

P.O. Box 5689
Ababa
Kenya

Charles F. Nicholson

Adjunct Associate Professor ( email )

333 Warren Hall
Ithaca, NY 14853-7801
United States

Clinical Associate Professor ( email )

Dept. of Supply Chain & Information Systems
University Park, PA 16802-3306
United States
814-863-3229 (Phone)
814-863-7067 (Fax)

Chris Delgado

International Food Policy Research Institute (IFPRI)

1201 Eye St, NW,
Washington, DC 20005
United States

Steve Staal

International Livestock Research Institute (ILRI)

P.O. Box 30709
Nairobi 00100
Kenya

Simeon K. Ehui

CGIAR - International Livestock Research Institute (ILRI) ( email )

P.O. Box 5689
Ababa
Kenya

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