Social capital and membership in dairy cooperatives in Kenya

Abstract

Dairy cooperatives in Kenya have been promoted for over 50 years as an important mechanism for providing collective bargaining power for the rural poor (Dobrin, 1970; Musalia, et al, 2007). The cooperative business model is meant to be democratic and autonomous, and features member-ownership, member-control and member-benefits. This research is centered around two vertically integrated dairy cooperatives in Kenya; the farmer members are owners of a cooperative that own their processing. The cooperative business model allows for families in Kenya's central highlands who own two cows to participate in the ownership, control and benefits from a dairy processing facility (Casaburi & Macchiavello, 2015; O'Brien, Banwart, & Cook, 2013). The development and social capital model described by Woolcock and Narayan (2000), suggests that a certain mix of bridging and bonding social capital ties creates the network that can lift rural smallholder farmers out of poverty. Lin connects the investment of individuals in social capital with an expected future return in the marketplace, an economically viable firm (Lin, 2001). The current study uses social capital theory to examine the cooperative business, specifically vertically integrated dairy cooperatives in Kenya. This research examines two questions. First, what social capital, economic, and demographic factors are predictors of membership in vertically integrated dairy cooperatives in Kenya. The second question examines what social capital, economic, and demographic factors are predictors of membership in Cooperative B, which scores higher than Cooperative A on all various dimensions of cooperative strength including leadership, governance, organizational structure, and investment. The dataset used for this study includes 2228 household surveys of 1053 members of two dairy cooperatives and 1175 dairy farmers who are non-members of cooperatives in the same Milkshed Area collected as part of a 5-year USAID-funded Cooperative Development Project implemented by Land O'Lakes International Development. The findings of this research indicate there is minimal difference between members of vertically integrated dairy cooperatives and non-members. The overall model that includes the entire sample (cooperative members and non-members) only correctly classifies 61.2% of the cases, 10% more than flipping a coin. However, the statically significant results support the hypothesis that social capital will be higher in cooperative members vs. non-members, specifically around trust in the community and investment in dairy cattle. The second model that includes only cooperative members correctly classifies nearly 80% of the all cases and predicted over 86% of respondents from Cooperative B as such. The results also indicate that high levels of satisfaction with milk prices and satisfaction with training and technical support to the cooperative members is higher in members of Cooperative B. These findings indicate bonding social capital as evidenced by strength of the collective to identify and respond to the needs of the member-owners. The analysis also indicates that members of Cooperative B have a stronger belief that they are in control of the outcomes of events in their lives, also a predictor of higher levels of overall civic engagement. Gender is also an important demographic in the findings. Cooperative members satisfied with the level of participation of women in cooperative management are 3.6 times more likely to be a member of Cooperative B, cooperative members who are satisfied with the relationship between cooperative members and management are 2.4 times more likely to be a member of Cooperative B. Both results are strong indicators of bridging social capital, specifically connecting groups, bridging the management team to the group of women interested in participating in management in the cooperative and the management to membership.