Cooperatives, partnerships and the challenges of quality upgrading: A case study from Ethiopia

Food value chains in developing countries are changing in response to the increasing quality and safety demands of domestic and international customers. Tighter vertical ties are developing to comply with these stringent quality requirements. In addition, the issue of limited bargaining power for smallholders in these coordinated chains has prompted a renewed interest in cooperative organizations. In Ethiopia, a partnership between a domestic trading firm and a cooperative union has helped enhancing capabilities at the supply-base as well as strengthening the cooperative's internal governance, managerial capabilities, and financial and non-financial resources. Based on in-depth interviews, our paper presents a case study on how this partnership operates. Good technical assistance provided by the union, with support from the exporting company and an NGO, is one of the key success factors of this partnership. The study also highlights that a high price is not necessarily a driver for a successful partnership, as predetermined prices are preferred by farmers despite relatively higher prices on the local market.