The Impact of Co-operative Membership on Smallholder Rubber Farmers’ Choice of Selling Outlets and Income in Liberia

Abstract

Rural households in Liberia depend on the production and sales of natural rubber for livelihood. It is the highest contributor to GDP and foreign exchange earner in the agricultural sector. Despite the importance of natural rubber to the Liberian economy, small and medium farmers that dominate the sector are faced with production and marketing constraints, particularly poor agronomic practices, lack of training in latex tapping and processing and limited selling outlets. Little attention has been given to natural rubber and the farmer co-operative handling it. This study determined the impact of co-operative membership on the choice of selling outlets and farm income in Liberia. Cross-sectional data was collected from 200 smallholder NR farmers stratified by co-operative and non-co-operative members in Gibi and Kakata districts using a structured questionnaire. Descriptive statistics were used to compare the socioeconomic, farm, and institutional characteristics of co-operative farmers with non-co-operative farmers. A logit model was used to determine the effect of co-operative on the choice of selling outlets used. The results showed that transaction costs variables specified as ownership of transport means, distance to the nearest local market, access to market information and time taken to find buyers) and socioeconomic characteristics (household size and access to extension service) significantly influenced household choice of selling outlets. Propensity score matching (PSM) was employed to determine the impact of the natural rubber co-operative on farm income. This required estimating the propensity scores for farmers’ participating in the natural rubber co-operative using a logit model. The results of the logit model indicate that socioeconomic characteristics (age, household size), institutional characteristics (training, access to production and market information, payment delays), and farm characteristics (farm size, disease type, and post-harvest losses)

significantly influenced household’s participation decisions in the natural rubber co-operative. Using the Nearest Neighbor Matching, Radius Matching, and Kernel-Based Matching, the average treatment effect which is the difference between natural rubber co-operative farmers and non-co-operative farmers were found to be US$ 109, 138 and 138 respectively. This indicates that the natural rubber co-operative had a significant positive impact on members’ income. The study recommends the establishment of market support services in the form of market information systems, accessible markets, and transportation means, will help provide up to date and reliable information on potential trading partners and prices. This will reduce the fixed transaction costs of accessing information and markets. Further, the study recommends the creation of awareness among non-co-operative farmers about the importance of collective action. This can be done through the Co-operative Development Agency of Liberia, government extension officers, and civil society organizations.