Abstract
Dairy cooperatives play a vital role in improving household welfare and reducing poverty by helping increase revenue streams for smallholder farmers. Thus, increasing smallholder farmers’ membership in dairy cooperatives and strengthening their functioning are essential. However, despite the growing expansion of dairy cooperatives in Ethiopia, limited empirical evidence jointly examines the determinants of cooperative membership and its impact on household income while adequately addressing selection bias, particularly in Northwestern Ethiopia. Hence, this study aimed to identify the determinants of membership in dairy cooperatives and examine how membership in dairy cooperatives affects household income among 582 smallholder farmers in Northwestern Ethiopia. Data were gathered using a multistage sampling procedure and a structured questionnaire. To identify the determinants of membership in dairy cooperatives, a binary logit model was applied. Results revealed that age, fair milk pricing, access to credit, the number of milking cows, and being male were likely to increase membership in dairy cooperatives. Conversely, family size and distance from the cooperative office were found to be negative determinants of cooperative membership. Propensity score matching (PSM) was used to evaluate the impact of cooperative membership on household income. The results indicated that membership in dairy cooperatives significantly improved household income. Specifically, members of cooperatives obtained an additional ETB 4783 compared to nonmembers, based on kernel matching with a bandwidth of 0.10 after correcting for pretreatment variable specification in the propensity score model. These findings indicate the importance of promoting dairy cooperative membership as a strategy for improving the income and livelihoods of smallholder farmers. The findings also suggest that improving fair milk pricing, expanding access to rural credit, strengthening dairy extension services, increasing the productivity of dairy herds, and improving the accessibility and quality of cooperative services would encourage greater farmer participation and enhance the income benefits of dairy cooperatives.