Relevance and Key Performance Indicators of Co-operative Unions in Serving Primary Co-operatives in Tanzania

Abstract

The relevance of co-operative unions to the development of primary co-operative societies in Tanzania is increasingly becoming vague. This is mainly due to the recent phenomenon of some of these societies declining from selling coffee through their co-operative unions, as was traditionally he practiced. Incidentally, such societies have been generally assumed to perform better than before decline. The main objective of this study was to examine the relevance and key performance indicators of a co-operative union in developing primary co-operative societies. The Kilimanjaro Native Co-operative Union (KNCU) Ltd. was taken as a case study. Specific objectives were to identify transaction costs incurred to market per kg of coffee, identify areas where the 'breakaway' primary co-operative societies were performing better than the co-operative union, and establish key performance indicators of a co-operative union. Findings were generated from a survey of 84 randomly selected farmers from six randomly selected primary co-operative societies. Data were analysed using SPSS. Descriptive statistics were used to identify transaction costs and the extent to which primary co-operatives were performing the co-operative unions ' role. A regression using a Logit model identified indicators of performance. A farmer selling coffee through KNCU incurred higher transaction costs (TShs 937.39/kg) per kg sold than selling through other arrangements (TShs 882.43/kg). Some cooperative societies were now performing (sometimes better) some roles, hitherto, performed by their unions. In their current operation, co-operative unions have lost their primary objective of reducing cost, hence, losing their relevance to develop primary co-operatives. Consequently, KNCU should consider using least cost alternatives (modern) technologies such as money transfer like "M-pesa" and "Tigo-pesa". Finally, KNCU should provide agricultural inputs, facilitate education and training of members and search for international market.