Does cooperative membership enhance inorganic fertilizer use intensity? Panel data evidence from maize farmers in Ethiopia

Abstract

Agricultural cooperatives are increasingly being viewed as an effective means of promoting agricultural technologies in developing countries. This paper examines the effects of cooperative membership on inorganic fertilizer use intensity. Employing a three‐wave panel dataset relating to smallholder maize farmers in Ethiopia, we model inorganic fertilizer application as a two‐step decision‐making process involving both fertilizer adoption and its use intensity. To reflect these two related steps, we use a double‐hurdle model. We account for unobservable household heterogeneity and endogeneity utilizing a correlated random‐effects framework and a control function approach. The findings reveal that cooperative membership increased inorganic fertilizer use intensity, as well as the probability of it being used in the first place by 4.2% and 5.3%, respectively. Following further examination of who benefits most among cooperative members, we discovered that membership benefits all farmers in terms of fertilizer use intensity, irrespective of the members’ poverty status. However, we did not observe a significant effect of cooperative membership on the likelihood of fertilizer use by land‐poor and less asset‐endowed households. This highlights the necessity of implementing policies that provide poor and marginalized Ethiopian maize farmers with resources that enhance the contribution agricultural cooperatives make to their well‐being.