The cooperative storage project aims to provide access to modern, reliable agricultural storage infrastructure to smallholder farmers in areas producing priority grains (maize, wheat, and tef). Expanding the availability of high-quality agricultural storage is critical for the commercialization of smallholder agriculture, food security, and price stabilization, all of which feed into broader transformation. Working through cooperatives to enhance storage and aggregation capacities builds on the inherent strengths of Ethiopia’s cooperative system (prevalence and reach, ownership by farmers, and social and commercial objectives) to transform them into successful marketers of smallholders’ output.
The project contributes to the agricultural objectives of GTP II by directly supporting crop initiatives to enhance the market components of the value chain. For instance, only a small percentage of grain produced is currently marketed; just 12.7% of maize grown by smallholders is marketed and only 10% of marketed maize is sold through cooperatives. Addressing the obstacles in storage capacity can significantly grow the amount of produce marketed through cooperatives.
With financial support from the AGP, and working closely with the Federal Cooperative Agency (FCA) and Regional Cooperative Promotion Agencies (RCPAs), the ATA has designed a nationwide program to rapidly expand cooperative storage facilities. The lack of such facilities is a key constraint preventing cooperatives from effectively catalyzing and supporting output marketing.
Although the GTP II’s Agricultural Cooperative Sector Development Strategy makes clear that cooperatives are the preferred vehicle for smallholder commercialization, they retain a predominant focus on livelihood support with limited engagement in output marketing and other commercial activities. Overcoming this requires a two-part approach that addresses both the physical infrastructure and soft skill requirements for cooperatives to be more commercially oriented. It entails making improvements to storage facilities and equipment, and providing management training to enable cooperatives to more efficiently aggregate produce and manage storage facilities. This expansion complements other national storage-related efforts, such as that of the Strategic Grain Reserve, as well as private sector focused initiatives.
The pilot phase of the project, presently underway, targets improving the storage capacity of four farmers’ cooperative unions (FCUs) and 40 primary cooperatives (PCs) through the construction of prefabricated warehouses, each with a capacity of 3,000 metric tons and 500 metric tons respectively. Site selection was based on five criteria:
A need to service at least one AGP or ACC woreda;
The ability of unions to pay 30% and PCs 10% of the total cost of the project;
A focus on tef, maize, and wheat output marketing;
Access to sizeable demand sinks to supply target crops; and
The prospect of improving managerial capacity.
Warehouse foundation work for the sites of 37 PCs and four unions has been finished, with a remaining three sites to be completed by mid-2009 EC. Materials for superstructure work have been procured from China and distributed to 30 sites; 28 of these have already completed superstructure erection.
Management training for the new facilities was carried out to complement the physical developments at all facilities, in which staff from participating FCUs and PCs were trained along with woreda, zonal, regional, and federal experts.
It is expected that all construction work will be finalized before the end of 2016, including superstructure and finishing work, at which point ownership and management of the facilities will be handed over to the primary cooperatives and unions. The eventual goal of the project is for the storage facilities to be run as independent, profit making businesses by the FCUs and PCs that helped build them.