Determinants of Membership and Benefits of Participation in Pyrethrum Cooperatives in Musanze District, Rwanda

Abstract

For many years, pyrethrum in Rwanda has been among the top cash crops that earn significant foreign exchange for the country. Farmers grow subsistence crops for their own food needs and rely on pyrethrum as the cash crop to supplement their income. Cooperatives have been an important institution to organize farmers especially in agriculture export, so as to earn significant foreign exchange. Despite the effort in improving pyrethrum enterprise and strengthening farmers along the value chain, membership to cooperatives is still low and the sector is also under stress of shortage in the supply of raw materials. It is therefore interesting to explore the apathy in the pyrethrum cooperatives. Such institutions should be attractive and guarantee economic benefits to their members. The study investigated the membership and participation in pyrethrum cooperatives in Rwanda, and the respective subsequent benefits. It used primary data collected from a sample of 250 pyrethrum farmers from Musanze District. Descriptive and endogenous treatment regression/Heckman model were used for analysis. The study observed differences between members of farmer cooperatives and non-members with respect to households’ characteristics, production resource endowments and access to institutional services such as credit and extension. The mean difference indicates that members of pyrethrum cooperative earned higher gross margin than non-members. The average means for members and non-members were Rfw 360,208.5 and Rwf 178,292.8 respectively while the mean gross margin was Rwf 280165.6 (US$1 = 900 RwF). The results showed that the majority of pyrethrum farmers are relatively old persons. The study also found that there were capital constraints to join pyrethrum cooperatives and subsequently, farmers with access to credit, off-farm income, higher land size and higher share of pyrethrum income are more likely to be members. This reflects the need to encourage youth to join cooperatives and also facilitate them to acquire the required

capital. This is because membership seems to favour older persons who appreciate the benefits and also have required capital. In regard to the benefits of participation, the study found that membership to pyrethrum cooperatives had a positive and significant effect on farm profit. In fact by participating in a pyrethrum cooperative a farmer could increase his/her farm benefit by Rwf 548567.8 (US$1 = 900 RwF) per hectare per year. Moreover, the study perceived that members benefited from a numbers of opportunities including; access credits and extension services through cooperatives. Furthermore, future plan to expand the production scale and access to extension services had negative effect on farm profit. The negative relationship between access to extension services and farm profit implies the need to develop a new and specific extension package pertaining to pyrethrum production. However this will also need to assess the effectiveness of the extension approach currently used in pyrethrum sector. Despite a number of factors that may hinder farmers from joining pyrethrum cooperatives, relevant institutions should address key concerns that include the need to organize farmers into cooperative so as to improve smallholder farming profitability. This implies that farmers must be facilitated to meet membership requirement and different capital required to join cooperative. Furthermore membership fees should be accepted to be paid through different installments to help small holders with resource constraints to join cooperatives. Keywords: Cooperatives; Pyrethrum; Farm profit; Farm benefits; Rwanda