Performance of Primary Agricultural Cooperatives and Member’s Satisfaction in North-Eastern Ethiopia:

Abstract

People form cooperatives to do something better than they could do individually or through a non-cooperative form of business. Forming a cooperative will not automatically solve business problems faced by individual households. This is because cooperatives are subject to the same economic forces, legal restrictions and international relations that other business face. Cooperative members’ expectations about the types and quality of services that should be offered and their criteria for performance of these services have a major impact on the level of satisfaction or dissatisfaction felt. Members’ satisfaction on the benefits obtained by establishing cooperatives should be evaluated by the level of the deviation of service expectation from perceived service performance. Thus, cooperatives performance should be continuously checked against the level of members’ satisfaction. This study therefore, aims at assessing the performance of primary agricultural cooperatives and thereby to identify factors that impede members’ satisfaction. To evaluate the performance of primary agricultural cooperatives in the study area, financial ratios was computed based on annual audit reports of the cooperatives. Here, liquidity ratio, debt ratio, profitability ratio and efficiency ratio were calculated as performance indicators. As a result, almost all of the primary agricultural cooperatives in the study area were performing inefficiently. Probit regression model was also employed to identify factors influencing the members’ satisfaction taking the overall cooperatives performance, the adequacy and context of services rendered by the cooperatives and the major services as function of socioeconomic and institutional explanatory variables. The model analysis revealed that, age, family size, position in the cooperative, patronage refund and distance of the cooperative from the farmer’s residence were found to be statistically significant.