Measuring the Benefits of Smallholder Farmer Membership in Producer‐Controlled Vertical Value Chains: Survey Findings From a Development Project in East Africa

The question addressed in this article is what precisely are the benefits that small‐scale farmers in the developing world receive from being members of producer‐controlled vertical value chains? A baseline comparative survey was conducted of members and non‐members of four vertically coordinated dairy cooperatives, three in Kenya and one in Uganda (N = 3,986), which are part of a larger five‐year longitudinal cooperative study. The study measures both objective income gains and subjective satisfaction gains from cooperative membership. Cooperative members have a small but statistically significant advantage over non‐members in income from dairy, but other incentives for membership are based on selective incentives (i.e., provision of non‐income services to members) and social capital (i.e., trust that the cooperative will purchase their milk and pay them a fair price). These findings suggest that the motivations for cooperative membership in developing countries are not dissimilar from motivations of cooperative members in more developed countries. This coupled with similar organizational design issues suggests that greater attention should be paid to larger‐scale vertically coordinated collective action models in development theory and research.