Abstract:
Farmer co-operatives are expected to be the backbone of agricultural development
by offering an extensive range of services to smallholder farmers. In many
countries, governments have established an environment conducive to the
development of co-operatives to ensure that they are profitable enterprises capable
of improving the social and economic transformation of their members. However,
smallholder farmer co-operatives in developing countries have proven to be largely
poor. This thesis empirically analysed the determinants of performance of Irish
Potato Farmer Co-operatives (IPFCs) in Rwanda. Specifically, the thesis analysed
the determinants of members' satisfaction with access to IPFCs' services, examined
the influence of co-operative characteristics on financial performance of IPFCs,
examined co-operative governance factors that affect financial performance of
IPFCs and determined the influence of market orientation dimensions on
performance of IPFCs. The study employed mixed-methods sequential explanatory
design and was conducted in the Northern and Western provinces, Rwanda. The
design allowed the use of mixed-method approach and serves as means for
triangulation and validation process. Northern and Western provinces were selected
purposively due to their predominance in Irish potato farming. Purposive sampling
technique was also applied to select co-operatives included in the study, 32 active
IPFCs with audited financial reports were selected. Simple random sampling was
used to select 387 members from sampled co-operatives and distributed to each cooperative on the basis of Probability Proportional to Size. This thesis used both
primary and secondary data sources. The former employed a structured
questionnaire, key informants’ interviews (KIIs) and focus group discussion (FGD),
while the latter was obtained from co-operatives’ audited financial reports and
administrative documents. Quantitative data were analysed by developing indices,
descriptive statistics, Pearson correlation, factor analysis with principal component
analysis, regression and ANOVA. Qualitative data obtained from KIIs and FGDs
were analysed using content analysis to validate and triangulate quantitative
findings. Findings reported a low level of members' satisfaction with IPFCs services
and the latter failed to improve their activities, forcing some farmers' exit from Irish
potato farming activities. Findings also showed that liquidity, leverage, number of
employees, size of the co-operative and value of share capital are significant factors
that contributed to financial performance. Moreover, among governance factors, the
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study reported members' participation (b = 1.456, p < 0.001), accountability (b =
0.520, p < 0.047), transparency (b = 1.046, p < 0.001) and leadership (b = 2.813, p
< 0.001) as significant factors contributing to the financial performance of IPFCs.
Concerning market orientation dimensions, findings showed a positive significant
relationship between customer orientation and financial performance (b = 0.090, p <
0.001), and competitor orientation and financial performance (b = 0.055, p < 0.001),
while supplier orientation has shown a negative correlation (b = -0.021, p < 0.05).
The study concluded that, due to limited financial capacity among IPFCs, providing
the required services to their members is a significant concern. Most IPFCs failed to
revive their activities, resulting in the exit from Irish potato farming activities for
some of the farmers. If this problem persists, it will have a detrimental impact on
the overall production of Irish potatoes in Rwanda. Limited financial capacity along
with weak internal governance and reported cases of mismanagement among IPFCs
encourage government interference in management and administration of their cooperatives. In response to the research findings, IPFCs should encourage their
members to increase their shareholdings to raise capital for their co-operatives and
to enhance performance. Rwanda Co-operative Agency (RCA) and other
community development partners should organize capacity-building training for
IPFCs leaders in self-governance to limit the interference of local authorities in cooperative administration under the guise of reported mismanagement and weak
leadership.