Copyright is owned by the Author of the thesis.  Permission is given for 
a copy to be downloaded by an individual for the purpose of research and 
private study only.  The thesis may not be reproduced elsewhere without 
the permission of the Author. 
 



 

 

COMPARATIVE ANALYSIS OF MEMBER 

BENEFITS IN THE SPECIALTY COFFEE 

COOPERATIVE AND THE CONVENTIONAL 

COFFEE COOPERATIVE 
 

 

A Case Study in Shan State, Myanmar 
 

 

A thesis presented in partial fulfilment of the requirements 

for the degree of 
 

Master of Agribusiness 
 

at Massey University, Palmerston North, New Zealand 
 

 

 
 

 

Hnin Nu Hlaing 
 

2024



 

 

   
    

i 

Abstract 
Cooperatives play a significant role in enhancing smallholder farmers’ access to 

markets, increasing their income, and mitigating rural poverty. In Myanmar, agricultural 

cooperatives are seen as key to improving the socio-economic conditions of smallholder 

farmers, particularly in rural areas where agriculture is the primary livelihood. Although Shan 

State, holds significant potential for quality coffee production, many coffee farmers in the 

region face challenges in producing high-quality coffee and accessing profitable markets. 

Thus, this study focuses on comparing the member benefits of the specialty coffee 

cooperative and the conventional coffee cooperative in Shan State, examining their impact on 

the livelihoods of smallholder coffee farmers.  

A semi-structured questionnaire was designed, and data was collected through online 

Zoom interviews, using the convenience sampling method. The interviews were conducted 

with 18 cooperative members and 5 cooperative leaders and data were analyzed using 

qualitative methods. The study examined multiple dimensions of member benefits, including 

economic gains, social support, market access, quality control, and community development. 

The results revealed that the specialty coffee cooperative, managed by a professional 

team, enables access to international markets, offering higher prices for higher quality 

specialty coffee. In contrast, the conventional coffee cooperative, with lack of professional 

team, primarily caters to neighboring markets with lower quality standards. While the 

specialty coffee cooperative provides significant marketing, financial, and environmental 

benefits, the conventional coffee cooperative focuses on meeting immediate needs, such as 

providing low-cost agricultural inputs and services, but struggles with long-term 

sustainability and significant economic gains for its members. 

The results of this study are specific to the context of Shan State region and may not 

be generalizable to other areas. However, they may offer some important implications. While 

cooperatives themselves should aim for professional management and targeted training to the 

needs of members to maximize long-term sustainability and benefits for their members, 

policymakers should focus on creating a supportive environment for cooperatives by 

improving infrastructure and providing access to affordable credit and market information.  

 

Key words: Coffee cooperatives, the specialty coffee cooperative, the conventional coffee 

cooperative, member benefits, Shan State, Myanmar.  



 

 

   
    

ii 

Acknowledgements 
I would like to express my sincere gratitude to all those who have supported and guided me 

throughout the completion of this master’s thesis. 

 

Firstly, I would like to express my deepest gratitude to my supervisors, Professor Nicola 

Shadbolt and Dr Elena Garnevska, for their unwavering support, insightful advice, and 

continuous encouragement. Their expertise and guidance were crucial in shaping the 

direction and depth of this research. I am deeply grateful for the time and effort they 

dedicated to helping me achieve this milestone. 

 

I am deeply thankful to the New Zealand Government for their financial support which made 

this educational journey possible. Your support has been instrumental in allowing me to 

pursue my studies and focus on my research. I am also very thankful to my academic coach, 

Cherie Wu, and my scholarship officers, Anna and Alison, for their invaluable support 

throughout my academic journey. I would also like to acknowledge the faculty and staff at 

Massey University, for providing me with the resources and academic environment necessary 

to complete this research. I would like to extend special thanks to my friends Kevaly, Ni, 

Angelo, Hana, Shivangi, Mohana, Shin Minn Thi, Ye Myint Aung and my Regency Foxes 

for their valuable support during my study and stay in New Zealand.  

 

A special note of thanks goes to the managers and members of the coffee cooperatives in 

Shan State who generously shared their time and experiences under the conflicts in the study 

area, making this study possible. Your cooperation and insights were vital to the success of 

this research. 

 

To my family, especially my mother Daw Khin San Win, my father U Hla Kyi, and my little 

brother Ye Linn Aung, your unwavering belief in me, along with your encouragement and 

understanding, has been a constant source of strength throughout this journey. I could not 

have reached this point without your love and support. 

 

Lastly, I would like to thank everyone who has contributed, in any way, to the successful 

completion of this thesis. Your contributions, whether big or small, have not gone unnoticed, 

and I am forever grateful. 



 

 

   
    

iii 

Table of Contents 

Abstract ...................................................................................................................................... i 

Acknowledgements .................................................................................................................. ii 

Table of Contents ................................................................................................................... iii 

List of Tables .......................................................................................................................... vii 

List of Figures ....................................................................................................................... viii 

List of Abbreviations .............................................................................................................. ix 

CHAPTER 1  INTRODUCTION ....................................................................................... 1 

1.1 Introduction .................................................................................................................. 1 

1.2 Research Background .................................................................................................. 1 

1.3 Problem Statement ....................................................................................................... 2 

1.4 Research question, aim and objectives ....................................................................... 3 

1.5 Structure of the thesis .................................................................................................. 4 

CHAPTER 2  BACKGROUND OF MYANMAR ................................................................ 6 

2.1 Introduction .................................................................................................................. 6 

2.2 An Overview of Myanmar ........................................................................................... 6 

2.2.1. Geographic Situation ................................................................................................... 6 

2.2.2. Climate ......................................................................................................................... 7 

2.3 Agricultural Sector in Myanmar ................................................................................ 8 

2.4 Myanmar’s Coffee Sector .......................................................................................... 12 

2.5 Specialty Coffee Production in Myanmar ............................................................... 18 

2.5.1 What is specialty coffee? ......................................................................................... 18 



 

 

   
    

iv 

2.6 Cooperatives in Myanmar ......................................................................................... 21 

2.6.1 Cooperatives between 1905 and 1947 ..................................................................... 21 

2.6.2 Cooperatives between 1948 and 1988 ..................................................................... 22 

2.6.3 Cooperatives between 1989 and 2011 ..................................................................... 22 

2.6.4 Cooperatives from 2012 to the present .................................................................... 23 

2.7 Laws on Cooperatives ................................................................................................ 25 

CHAPTER 3 LITERATURE REVIEW ............................................................................. 26 

3.1. Evolution of cooperatives ............................................................................................... 26 

3.1.1. Definitions of Co-operatives ...................................................................................... 28 

3.1.2. The Principles of Co-operatives ................................................................................. 29 

3.2. Why are cooperatives formed? ...................................................................................... 30 

3.3. Why members join cooperatives .................................................................................... 32 

3.4. Members’ Benefits of Cooperatives .............................................................................. 34 

3.4.1. Social Benefits ........................................................................................................... 35 

3.4.2. Marketing Benefits ..................................................................................................... 36 

3.4.3. Benefits in supplying inputs and services .................................................................. 37 

3.4.4. Financial Benefits ...................................................................................................... 37 

3.4.5. Training and education benefits ................................................................................. 38 

3.4.6. Community Benefits .................................................................................................. 38 

3.4.7. Environmental Benefits ............................................................................................. 39 

3.5. The emerging market trends in agri-food sector ......................................................... 39 

3.5.1. Emerging Trends in the Global Coffee Market ......................................................... 40 

3.5.2. The competitive edge of specialty coffee .................................................................. 40 

3.6. The role of farmers’ organizations in participation in specialized markets .............. 42 

3.7. Summary and Research Conceptual Framework ........................................................ 43 

CHAPTER 4 RESEARCH METHODOLOGY ................................................................. 45 

4.1. Research aim, and objectives ......................................................................................... 45 



 

 

   
    

v 

4.2. Research strategy ............................................................................................................ 45 

4.3. Study area selection ........................................................................................................ 46 

4.4.  Sampling strategy and sample size ............................................................................... 48 

4.5.  Data collection ................................................................................................................ 49 

4.6.  Data analysis ................................................................................................................... 50 

4.7. Ethical Considerations ................................................................................................... 51 

CHAPTER 5 DESCRIPTIVE ANALYSIS ......................................................................... 53 

5.1. The Cooperative 1: The Specialty Coffee Cooperative ............................................... 53 

5.1.1. Background information ............................................................................................ 53 

5.1.2. Establishment of the co-op ......................................................................................... 55 

5.1.3. Governance and Management .................................................................................... 60 

5.1.4. Membership ............................................................................................................... 63 

5.1.5. Coffee processing methods by members ................................................................... 65 

5.1.6. Markets ...................................................................................................................... 70 

5.1.7. Analysis of member benefits by the specialty cooperative ........................................ 73 

5.2. The Cooperative 2: The Conventional Coffee Cooperative ........................................ 84 

5.2.1. Background information ............................................................................................ 84 

5.2.2. Establishment of the cooperative ............................................................................... 84 

5.2.3. Governance and Management Structure .................................................................... 90 

5.2.4. Membership ............................................................................................................... 92 

5.2.5. Coffee processing methods ........................................................................................ 92 

5.2.6. Markets ...................................................................................................................... 95 

5.2.7. Analysis of member benefits in conventional cooperative ........................................ 98 

CHAPTER 6 DISCUSSION ............................................................................................... 110 

6.1. Overall Study Discussion .............................................................................................. 110 

6.1.1 Comparison of the characteristics of two cooperatives ............................................ 111 

6.1.2. Comparison of member benefits between two types of coffee cooperatives ........... 115 



 

 

   
    

vi 

CHAPTER 7 CONCLUSION AND RECOMMENDATIONS ....................................... 122 

7.1  Conclusion ................................................................................................................ 122 

7.2  Recommendations .................................................................................................... 123 

7.2.1 Recommendations for the two cooperatives studied ............................................. 123 

7.2.2 Recommendations for policy makers ..................................................................... 124 

7.3 Limitations of the study ........................................................................................... 125 

7.4 Implications of future research ............................................................................... 126 

References ............................................................................................................................. 127 

Appendix 1: Awards from Myanmar Coffee Association ................................................ 138 

Appendix 2: Letter to participants ..................................................................................... 139 

Appendix 3: Consent Form for Cooperative Case Study Participants ........................... 141 

Appendix 4: Semi-structured questions for cooperative leaders/ managers .................. 142 

Appendix 5: Semi-structured questions for cooperative members (farmers) ................ 144 

Appendix 6: Ethical Approval ............................................................................................ 146 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

   
    

vii 

List of Tables 
Table 2.1: Major crops grown in different areas of Myanmar ................................................. 11 

Table 2.2: Number of cooperatives in different sectors of Myanmar ...................................... 24 

Table 4.1: Total sample numbers of the study ......................................................................... 48 

Table 5.1: Assistance to the co-operative ................................................................................ 58 

Table 5.2: Specialty coffee producing farming communities, area planted and production 

volume by the cooperative ............................................................................................... 59 

Table 5.3: Specialty coffee (green beans) sales to the international markets (metric tonnes) . 70 

Table 5.4: Specialty coffee (green beans) sales to the domestic markets ................................ 71 

Table 5.5: Price differences according to grade (based on global market price and quality) .. 72 

Table 5.6: Key member benefits in the specialty coffee cooperative according to the rank of 

importance ........................................................................................................................ 74 

Table 5.7: Business Departments and their main operations ................................................... 85 

Table 5.8: The purchasing volume of coffee from farmers (Metric tonnes) ........................... 87 

Table 5.9: Assistance to the co-op ........................................................................................... 89 

Table 5.10: Coffee sales volumes to the neighboring markets (Metric tonnes) ...................... 96 

Table 5.11: Coffee sales volumes to the domestic markets (Metric tonnes) ........................... 96 

Table 5.12: Key member benefits of the conventional coffee cooperative according to the 

rank of importance ........................................................................................................... 98 

Table 5.13: Summary of key member benefits from two cooperatives ................................. 109 

Table 6.1: Comparison of the basic characteristics of the two coffee cooperatives .............. 112 

Table 6.2: Comparison of key member benefits between two cooperatives ......................... 115 

 

 

 

 

 

 

 

 



 

 

   
    

viii 

List of Figures 
Figure 2.1: Myanmar’s Map ...................................................................................................... 7 

Figure 2.2: GDP contribution of different sectors in Myanmar ................................................. 9 

Figure 2.3: Most Produced Commodities in Myanmar (Average 2012-2021) ........................ 10 

Figure 2.4: Sown Acreage of Agricultural Crops Nationwide (2020) ..................................... 10 

Figure 2.5: Coffee-growing regions in Myanmar .................................................................... 14 

Figure 2.6: The Volume of Coffee Production (Green) in Myanmar, 2012-2021 ................... 16 

Figure 2.7: Destinations of Myanmar Coffee Exports (2022) ................................................. 17 

Figure 2.8: The Volume of Coffee Exports, 2013-2022 .......................................................... 17 

Figure 2.9: The coffee quality pyramid ................................................................................... 19 

Figure 2.10: Flavour wheel of specialty coffee ....................................................................... 19 

Figure 2.11: Cupping Score of specialty coffee ....................................................................... 20 

Figure 3.1: Theoretical Framework ......................................................................................... 44 

Figure 4.1: Map of the study location and the location of the study co-ops ............................ 47 

Figure 4.2. Data collection methods ........................................................................................ 50 

Figure 4.3: Qualitative Data Analysis ...................................................................................... 50 

Figure 5.1: Governing structure of the cooperative ................................................................. 61 

Figure 5.2: Cooperative members hand-sorting freshly harvested coffee cherries ................. 66 

Figure 5.3: Drying process of coffee cherries on raised beds under natural sunlight .............. 67 

Figure 5.4: Labeling coffee cherries on drying beds for traceability ....................................... 67 

Figure 5.5: Fully dried coffee cherries stored in warehouse before milling ............................ 68 

Figure 5.6: Sun drying process of pulped coffee beans on raised beds ................................... 69 

Figure 5.7: Drying pulped coffee beans on raised beds during the honey processing method 69 

Figure 5.8: Governance and management structure of the co-op ............................................ 90 

Figure 5.9: Pulping high-quality coffee cherries using a coffee pulper ................................... 93 

Figure 5.10: Drying of pulped coffee on raised beds ............................................................... 93 

 

 

 

 

 

 

 



 

 

   
    

ix 

List of Abbreviations 
 

ADB   Asian Development Bank 

AGM   Annual General Meeting 

AVSI   Association of Volunteers in International Service 

BOD   Board of Directors 

CCS   Central Cooperative Society 

CQI   Coffee Quality Institute 

CSO   Central Statistical Organization 

CRIETC  Coffee Research, Information, Extension and Training Centre 

Exim Bank  Export-Import Bank of Korea 

FAO   Food and Agriculture Organization 

FAOSTAT  Food and Agriculture Organization Statistics 

FDA   Food and Drug Administration 

GAP   Good Agricultural Practices 

GDP   Gross Domestic Product 

GMO   Genetically Modified Organism 

ICA   International Cooperative Association  

IFPRI   International Food Policy Research Institute 

INGOs   International Non-governmental Organizations 

ITC   International Trade Centre  

ITA   International Trade Administration 

MCA   Myanmar Coffee Association 

MMK   Myanmar Kyat 

MOALI  Ministry of Agriculture, Livestock and Irrigation 

MUHEC  Massey University Human Ethics Committee 

NZD   New Zealand Dollar 

PP   Polypropylene 

PRC   People’ Republic of China 

SCA   Specialty Coffee Association 

SCAA   Specialty Coffee Association of America 

SOPs   Standard Operating Procedures 

SSIC   Shan State Investment Committee (SSIC) 



 

 

   
    

x 

UN   United Nations 

UNODC   United Nations Office on Drugs and Crime 

USA   United States of America 

USAID  United States Aid for International Development  

VFV   Vacant, Fallow and Virgin Land 

 

§ Exchange Rate: 1 New Zealand Dollar (NZD) is equivalent to 2000 Myanmar Kyat 

(MMK) in December 2023 according to RIA Money Transfer.  



 

 1 

CHAPTER 1  INTRODUCTION 

1.1 Introduction 
Chapter one provides an overview of the thesis and is divided into five sections. 

Section Two outlines the research background following the introduction. Section Three 

discusses the problem statement, while Section Four details the research questions, aims, and 

objectives. Section Five concludes the chapter by outlining the structure of the thesis. 

 

1.2 Research Background  
Enhancing the productivity, profitability, and sustainability of smallholder agriculture 

is considered a key strategy for alleviating rural poverty in developing countries. Institutional 

innovations are seen as vital in this effort, as they can help farmers address market failures 

(Hazell et al., 2010). There is growing interest in producer organizations, such as 

cooperatives, as a means to improve smallholder farmers’ market access, boost their incomes, 

and reduce rural poverty (Bernard & Spielman, 2009; Bernard & Taffesse, 2012; Fischer & 

Qaim, 2012a, 2012b; Markelova et al., 2009; Shiferaw et al., 2009). Cooperatives and farmer 

associations are essential in assisting farmers with transitioning their production methods and 

adhering to quality standards (Bacon, 2005; Varangis, 2003). Verhaegen & Van 

Huylenbroeck (2001) emphasize that organizations like cooperatives can significantly lower 

the costs associated with gathering information. Consequently, cooperatives are crucial in 

helping farmers gain access to specialized markets (Blackman et al., 2005).  

The importance of agricultural cooperatives in fostering socio-economic development 

of smallholder farmers is widely acknowledged in many developing countries, including 

Myanmar. As an agricultural-based nation, around 70% of Myanmar’s population resides in 

rural areas (Central Statistical Organization (CSO), 2021) and depends on agricultural 

activities for their livelihood (Okamoto, 2020). Moreover, small-scale farmers manage 

around 80 % of the farms in the country, cultivating more than half of its arable land 

(Boughton et al., 2020). Given that agriculture is the foundation of Myanmar’s economy, 

enhancing rural development remains a key priority (Okamoto, 2020). Recognizing the 

importance of improving the socioeconomic status of rural communities, the Government is 

promoting the creation of cooperative associations among groups with shared interests to 



 

 2 

enhance the socio-economic development of rural communities in Myanmar (ICA, 2020). 

Currently, 81% of all cooperatives in Myanmar are related to agriculture, livestock, and 

forestry (ICA, 2020). Cooperatives focused on agriculture, savings, thrift, and microfinance 

are actively encouraged to support poverty reduction, sustainable farming, and financial 

inclusion. In agricultural cooperatives in Myanmar, supplying high-quality crop varieties, 

essential agricultural inputs, and improving market access are among the primary objectives 

(ICA, 2020).  

Shan State has significant potential for agricultural development in Myanmar (Shan 

State Investment Committee (SSIC), 2018). The state’s economy heavily relies on the 

agricultural sector, which produces a wide variety of crops that are highly sought after by 

neighbouring countries (SSIC, 2018). The sub-tropical climate, marked by warm days, cool 

nights, and consistent rainfall in the higher altitudes of northern regions such as Shan State, is 

ideal for cultivating high-quality Arabica coffee (Schmid, 2015). Shan State currently leads in 

coffee production in Myanmar, with a significant concentration of coffee farming in 

Ywangan township, where 90 out of 125 villages are engaged in this activity. The majority of 

coffee produced in Shan State comes from small-scale farmers who grow it on plots of less 

than one hectare. Most of the coffee cooperatives are currently located in Shan State 

(MOALI, 2023) and coffee production is a vital economic activity for many smallholder 

farmers, who often organize into cooperatives to improve their market access and secure 

better prices (USAID, 2019).  

 

1.3 Problem Statement  
Shan State in Myanmar, is home to a burgeoning coffee industry which offers 

promising opportunities for economic development and poverty alleviation among 

smallholder farmers. The region’s unique geography and ecosystems create favourable 

conditions for high-quality coffee production, opening doors to both domestic and 

international markets. However, while some coffee cooperatives in the region are producing 

high-quality specialty coffee to gain better market access and achieve higher incomes, others 

are still engaged in the production of lower-quality conventional coffee. Despite the 

importance of agriculture in Myanmar’s economy and the Government’s efforts to promote 

the rural development through cooperatives, farmers from some coffee cooperatives in Shan 

State are still encountering difficulties in producing high  quality coffee. Consequently, most 



 

 3 

smallholder coffee farmers in Shan State face challenges in accessing premium markets 

which offer higher prices for their coffee, thus limiting their potential for increased income 

and economic stability.  

This research addresses a critical gap in the existing literature. While there is a 

growing body of research on coffee cooperatives and their role in sustainable agriculture, 

little or no attention has been devoted to the analysis of member benefits within the specialty 

coffee cooperative and the conventional coffee cooperative in the specific context of Shan 

State, Myanmar. As such, there is a lack of empirical evidence to guide policymakers, 

cooperative leaders, and stakeholders in making informed decisions to optimize the socio-

economic benefits of coffee cooperatives in the region. Therefore, this study has aimed to 

address these pressing issues by conducting the analysis of member benefits within the 

specialty coffee cooperative and the conventional coffee cooperative in Shan State, 

Myanmar. Understanding the impacts of these two types of cooperatives can inform 

strategies for enhancing the well-being of smallholder coffee farmers and contributing to the 

sustainability of the coffee industry in the region. 

 

1.4 Research question, aim and objectives  
Research question 
 

What are the benefits  received by members from the specialty coffee cooperative and the 

conventional coffee cooperative in Shan State, Myanmar? 

 

Research aim 
- To study the benefits received by members of two types of cooperatives: the specialty 

coffee cooperative and conventional coffee cooperatives in Shan State of Myanmar 

 

Research Objectives  

 
To achieve this goal, there are three objectives in this study: 

1) To review the literature to understand how cooperatives provide benefits to 

members  



 

 4 

2) To study and analyze two types of coffee cooperatives: the specialty coffee 

cooperative and the conventional coffee cooperative in the study area  

3) To analyze and compare member benefits between the specialty coffee 

cooperative and the conventional coffee cooperative 

 

1.5 Structure of the thesis  
This thesis is comprised of seven chapters. The first chapter provides an introductory 

overview of the study. It also outlines the research problem, research question, research 

objectives and it includes the research process.  

 

Chapter Two presents a basic description of background information about Myanmar. It also 

provides specific background information on three important areas: the agricultural sector, 

the coffee industry and the evolution of cooperatives and its laws and legislations in 

Myanmar.  

 

Chapter Three presents a review of the literature on cooperatives, including the evolution, 

definition and principles of cooperatives: why cooperatives are established and why members 

join cooperatives: member benefits of cooperatives: the emerging market trends in the agri-

food sector and global coffee market and the role of farmers’ organisations in participation in 

specialized markets.  

 

Chapter Four describes the research methodology used in the study. This chapter discusses 

the research aim and objectives, research strategy, study area selection, sampling strategy and 

sampling size, data collection, data analysis and the ethical consideration of the research is 

also provided.  

 

Chapter Five outlines the two cooperatives in terms of their background, governance and 

management, membership, and targeted markets. It also presents the analysis of member 

benefits identified in this study.  

 



 

 5 

Chapter Six presents the discussion of the research. This chapter discusses the comparison of 

basic characteristics of two cooperatives and the comparison of members benefits provided 

by these cooperatives.  

 

Chapter Seven describes the overall conclusion and it also provides the limitations, 

recommendations for cooperatives studied and policymakers and implications for future 

research.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 6 

CHAPTER 2  BACKGROUND OF MYANMAR 

2.1 Introduction 
 This chapter presents the agricultural landscape in Myanmar, with a specific emphasis 

on the coffee sector and cooperatives in the country. After the Introductory Section, Section 

Two gives overview of Myanmar which focuses on an examination of geographical and 

climatic considerations which impact agriculture in the region. It is followed by an 

exploration of the diverse assortment of crops grown throughout Myanmar. Furthermore, 

Section Three provides insights into the agricultural sector of the country with an explanation 

of the dispersion of primary agricultural commodities across the various regions of the 

country, the export volume and value of the most produced commodities in the country. 

Subsequently, Section Four provides a comprehensive analysis of the coffee sector in 

Myanmar, encompassing critical facets such as coffee production and processing systems, the 

spectrum of coffee varieties cultivated by local farmers, and coffee exports. Finally, Section 

Five explains the cooperatives and its associated laws and legislations in the country. 

 

2.2 An Overview of Myanmar 

2.2.1. Geographic Situation 

 

Myanmar, officially known as the Republic of the Union of Myanmar, is situated in 

the southeastern part of Asia, and is bounded by the Andaman Sea and the Bay of Bengal on 

its southern and southwestern sides (ITC, 2014). It shares its borders with China in the 

northern and northeastern directions, Laos in the east, and Thailand to the southeastern part, 

while also being adjacent to Bangladesh in the western part and India in the north-west (see 

Figure 2.1) (Steinberg, 2013). The country covers an area of 676,578 square kilometers and 

had a population of 51,486,253 in 2014, with projections suggesting that the population will 

rise to 59,399,039 by 2030 (DOP, 2017). Within its borders, there are eight primary ethnic 

groups along with various subgroups that collectively speak over 100 languages. The capital 

city is Nay Pyi Taw, and the largest city, as well as the central commercial hub, is Yangon. 



 

 7 

 

 
Figure 2.1: Myanmar’s Map 

Source: FAOSTAT (2021)  

 

Myanmar is divided into three primary agro-ecological regions: the delta and coastal 

area, the arid zone, and the hill regions (Haggblade & Boughton, 2013). In the delta and 

coastal zone, which hold the highest population density and benefit from abundant 

monsoonal rainfall and easy water access, the dominant agricultural activities revolve around 

rice and fish production. The dry zone is situated in a rain-shadow, leading to productive 

agriculture primarily occurring in river valleys, where a combination of rain-fed upland crops 

and rice is cultivated. The hill regions are characterized by a greater presence of tree and 

horticultural crops compared to other areas, making them suitable for less intensive farming 

practices. 

2.2.2. Climate 

Myanmar features a tropical to sub-tropical monsoon climate characterized by three 

distinct seasons. These seasons consist of i) the hot, arid inter-monsoonal period, spanning 



 

 8 

from mid-February to mid-May, ii) the rainy southwest monsoon season, which occurs from 

mid-May to late October, and iii) the cool and relatively dry northeast monsoon season, 

extending from late October to mid-February. 

The climate in Myanmar exhibits variation across its diverse ecological zones, primarily 

influenced by factors such as proximity to the coastline and altitude (World Bank, 2021). In 

the southern regions, including the Ayeyarwady Delta and the coastal areas of Rakhine, Mon, 

and Tanintharyi, the climate resembles that of typical Southeast Asia. Here, temperatures 

remain consistently high at around 26°C throughout the year, and annual precipitation levels 

range from 2,500 to 5,500 mm. These regions are also particularly susceptible to tropical 

cyclones. Moving towards Myanmar's central zone, the climate becomes drier, with an 

average annual rainfall of typically 500-1,000 mm. This area experiences more significant 

temperature fluctuations, although temperatures can still soar above 40°C (World Bank, 

2021).  

In the northern and eastern mountainous regions of Myanmar, the climate is generally 

cooler, with moderate rainfall ranging from 1,000 to 2,000 mm per year (World Bank, 2021). 

The topography, characterized by undulating hills, valleys, and mountain ranges, combined 

with warm days and cool nights, creates optimal conditions for coffee cultivation (Origin, 

2023). This is especially true in the Shan Hills, which extend into the coffee-producing areas 

of Yunnan and Thailand.  

 

2.3 Agricultural Sector in Myanmar  
 

Myanmar is an agricultural-based country where about 70% of the total population 

live in rural areas (CSO, 2021) and rely on agriculture (Okamoto, 2020). As the agricultural 

sector is the backbone of Myanmar’s economy, the development of rural areas is a primary 

focus for the country (Okamoto, 2020). Out of the 67.6 million hectares of land in Burma, 

approximately 12.8 million hectares are actively utilized for cultivation (ITA, 2022). The 

agricultural sector contributes 20% of GDP (World Bank, 2022) (see Figure 2.2), employs 

about 56% of the total workforce, and accounts for 21% of total exports (Tun, 2022). 

Therefore, it is evident that substantial progress in agriculture is indispensable for achieving 

economic growth and enhancing social well-being within Myanmar. 



 

 9 

Myanmar possesses significant water resources, concentrated around four major rivers 

and their associated systems. Additionally, three out of Myanmar’s four major river systems 

originate within its borders, granting the country exclusive control over them. As global 

water scarcity increasingly impacts agricultural production, especially in neighboring 

countries like the PRC, Myanmar’s ample water resources present a significant competitive 

advantage in agriculture, although less than 10% of these resources have been effectively 

utilized (Raitzer et al., 2015).  

 

 
Figure 2.2: GDP contribution of different sectors in Myanmar 

Source: World Bank Data Bank (2022) 

 

The nation possesses four prominent strengths that give it a competitive edge in 

agriculture: ample land, water, and labor resources, coupled with its proximity to upcoming 

major food markets. With a vast expanse of 12.8 million hectares dedicated to cultivation and 

the possibility of expanding this area by almost 50% through untapped fallow regions, the 

agricultural prospects are extensive (Raitzer et al., 2015). Furthermore, the diverse landscape 

and ecosystems empower farmers to cultivate a wide variety of cereals, pulses, horticultural 

produce, fruits, as well as livestock and fishery products (Raitzer et al., 2015). 

Rice stands as the primary agricultural commodity of Myanmar, contributing to 

approximately 43 percent of the overall agricultural production value (ITA, 2022) and the 

average tonnes produced from 2012 to 2021 were around 26 million tonnes (see Figure 2.3). 

Myanmar ranked seventh in rice production in the world in 2018 (FAO, 2022) and rice is 

cultivated all over the country with 41% of total sown areas in 2020 (see Figure 2.4). Other 

20%

41%

39%

GDP contribution by sector in 
Myanmar (2022)

Agriculture, forestry and
fishing

Industry (including
construction)

Services



 

 10 

important crops include sugarcane, beans, maize, and groundnuts. In fact, approximately 80% 

of Myanmar’s farmers engage in rice farming, often followed by the planting of beans and 

pulses after the rice cultivation season (World Bank, 2016).  

 

 
Figure 2.3: Most Produced Commodities in Myanmar (Average 2012-2021) 

Source: FAOSTAT (2021) 

 

 
Note: Others include wheat, oilseeds, spices, tobacco, beverage crops, vegetables and 

fruits, fiber and miscellaneous 

Figure 2.4: Sown Acreage of Agricultural Crops Nationwide (2020) 

Source: Central Statistical Organization (2023) 

 

0.00 10,000,000.00 20,000,000.00 30,000,000.00

Rice
Sugarcane

Other vegetables
Beans, dry

Raw milk of cattle
Maize (corn)

Groundnuts, excluding shelled
Other fruits

Coconuts, in shell
Plantains and cooking bananas

Most Produced Commodities of Myanmar 
(Tonnes) (Average 2012-2021)

41%

23%
3%

33%

Sown acreage of agricultural 
crops nationwide (2020)

Rice

Pulses

Maize

Other crops



 

 11 

Myanmar does produce a variety of other crops, although their production levels and 

export volumes are notably lower compared to the top three crops which are rice, sugarcane, 

and beans. The Ayeyarwady Delta Region contributes the largest portion to rice production, 

whereas the central dry zone region predominantly contributes the highest share to beans and 

pulses’ production (Eurocham, 2019). Pulses make up 23.13% of the sown area, reflecting 

their importance for both local consumption and export markets, while other crops, including 

oilseeds, spices, and vegetables, account for 32.88%, showing significant agricultural 

diversity. Maize, with 3.26% of the sown area, serves as a secondary crop mainly used for 

food and feed (CSO, 2023).  

 

Table 2.1: Major crops grown in different areas of Myanmar 
 

Area Major Crops 

Delta region (Ayeyarwady Region, Yangon 

Region, Bago Region, Mon State) 

Rice (intensive rice production), and pulses  

Central dry zone (Magway Region and 

Mandalay Region) 

Rice (subsistence), oil crops, pulses, 

vegetables, tea, sesame, and groundnuts 

Hilly and mountainous zone (Shan State, 

Chin State, Kachin State) 

Rice, maize, wheat, sorghum, vegetables, 

sugarcane, coffee, and tea 

Coastal zone (Mon State, Tanintharyi 

Region and Kayin State) 

Rice, rubber, oil-palm, and fruits tree 

Source: Eurocham Myanmar, 2019 

 

With 56% of the workforce engaged in agriculture, labor remains abundant in 

comparison to other Asian nations. Labor costs are also low, as Myanmar’s minimum wage 

ranks as the most affordable in Southeast Asia (the Philippines National Productivity 

Commission, 2014), and the adoption of mechanization remains limited. Given that labor 

plays a crucial role in agricultural production, this circumstance aids in keeping production 

expenses at a minimum. Given its strategic location between the extensive regional markets 

of India and the PRC, Myanmar’s farmers and agribusinesses possess the potential to 

competently engage in both regional and global agricultural markets. However, this potential 

can be realized through appropriate investments in institutions and infrastructure. 

Based on the latest Myanmar Agricultural Census, 80% of farms in Myanmar are 

managed by small-scale farmers who cultivate over half of the nation’s arable land 



 

 12 

(Boughton et al., 2020). Thus, the agricultural landscape in Myanmar is predominantly 

characterized by smallholder farmers ranging from one to five hectares (World Bank, 2016). 

Despite their limited size, these farms provide crucial employment opportunities for landless 

households, owing to the labor-intensive nature of Myanmar's agriculture. However, the 

majority of these smallholder families, along with the local workers they hire, remain 

impoverished (Boughton et al., 2020). 

Myanmar’s wage levels in the agricultural farming remain notably low when compared 

to global standards, with daily wages standing at just $2 in the Delta and Dry Zones (World 

Bank, 2016). Wage rates tend to peak during the dry season. Owing to low profit and wages 

from agricultural farming, approximately 10 percent of the Myanmar population especially 

the young generation, which equates to around 5 million individuals, depart from their farms 

and possessions, relocating as migrant workers to foreign countries (FAO, 2023). Thus, most 

smallholder farmers who operate in farming are old people with a low level of education and 

are not able to practice the new technology in the farming system. Therefore, the 

development of the agricultural sector in Myanmar lags behind when compared to the 

neighboring nations. 

 

2.4 Myanmar’s Coffee Sector  
 

Coffee was first brought to Myanmar by the British during their colonial rule. 

However, it was not widely cultivated. In the 1930s, Catholic missionaries introduced coffee 

to the Shan State which is the study area, and this is where most of Myanmar’s coffee is 

grown today. After gaining independence in 1948, Myanmar did not pay much attention to 

coffee farming because many areas where coffee could grow were controlled by different 

ethnic guerrilla groups (Schmid, 2015). The military governments fought against these 

groups, causing further neglect. For many years, Myanmar remained isolated and did not 

attract foreign investment. However, things are changing now. In the past decade, Myanmar 

has started to explore its potential as a significant producer of arabica coffee. Additionally, a 

small coffee industry that grows robusta beans has emerged in the country’s lowlands in the 

southwest and southeast (Schmid, 2015).  

According to Schmid (2015), the cultivation of Myanmar’s coffee, primarily arabica 

variety is concentrated in Shan State, Mandalay Region, Kayin State, and Chin State. Official 



 

 13 

records indicate that coffee plantations cover an area of 27,000 acres in Shan State, 10,000 

acres in Kayin State, around 5,000 acres in Mandalay (including the picturesque hill town of 

Pyin Oo Lwin), and 2,000 acres each in Kachin and Kayah States (Thant, 2017). Owing to its 

predominantly mountainous terrain, Myanmar primarily cultivates arabica coffee varieties. 

Robusta coffee is mostly cultivated in the lowlands, while arabica is grown at higher 

elevations. It can be estimated that approximately 80% of coffee beans grown in Myanmar 

are of the arabica variety mainly grown in Shan State and Mandalay Region, while the 

remaining 10% are Robusta varieties, mainly cultivated in the Than Taung region. Typical 

Arabica coffee varieties cultivated comprise Caturra, Catimor, Bourbon, Typica, S795, and 

SL34. In a cooperative effort funded by Nestlé, seven Robusta varieties have also been 

introduced in Kayin State (see Figure 2.5) (Origin, 2023).   

The sub-tropical weather characterized by alternating warm days and cool nights, 

along with regular rainfall in the central regions such as Mandalay and Pyin Oo Lwin and 

northern elevated regions of Myanmar such as Shan State, was found to be optimal for 

cultivating the high-quality arabica coffee variety (Schmid, 2015). This particular region 

features elevated plateaus possessing suitable red soils, altitudes surpassing 3,300 feet, well-

distributed rainfall ranging from 59 to 79 inches, and a noticeable dry season. These specific 

conditions are typically present within latitudes of approximately 20 to 24 degrees north 

(Basu et al., 2019). 

Currently, Shan State accounted for the largest proportion in coffee production in 

Myanmar and, in one township called Ywangan in Shan State, a significant number of 

villages, 90 out of 125, are involved in coffee farming. Most of the coffee produced in Shan 

State comes from small-scale farmers who cultivate on plots of land covering less than one 

hectare. Most of these households typically maintain gardens with 10-20 coffee trees while 

also cultivating subsistence crops alongside them (Origin, 2023).  

In Myanmar, dry natural processing and fully-washed coffee processing methods are 

widely used (Origin, 2023). The dry and warm conditions during the coffee harvesting 

season, which usually occurs in the dry months from December to March, are especially 

favourable for dry natural processing, although many coffees undergo the fully washed 

method. The harvesting process involves careful picking, processing, and sorting at the 

village level. Subsequently, the harvested coffee is either sent to a central mill for further 

processing or sun-dried on elevated beds.  

 



 

 14 

 
Figure 2.5: Coffee-growing regions in Myanmar 

Source: Coffee Research, Information, Extension & Training Centre (CRIETC) 
 

To improve coffee production in Myanmar and meet international quality standards, 

the Myanmar Coffee Association (MCA) was established in 2014, headquartered in Pyin Oo 

Lwin, a major area for growing arabica coffee in the country. It is a privately funded 

organization with 115 members, including 25 larger estates, five coffee roasters, and five 

trading firms (Schmid, 2015). Their mission is to represent coffee businesses across the 

country and expand to cover more growing regions, like Chin Hill and Than Taung. Another 

group, the Mandalay Coffee Group, formed in 2014, consists mostly of larger coffee estates 



 

 15 

in Pyin Oo Lwin. They have a total cultivation area of 2,500 acres among their 25 members 

and produced 200 metric tonnes of coffee in the recent harvest, valued at $650,000. They also 

plan to involve local roasters and trading companies to promote domestic sales and exports 

(Schmid, 2015).   

Winrock International, a US-based NGO with experience in agriculture technical 

assistance, also plays a significant role in developing Myanmar’s coffee industry (Schmid, 

2015). Through the “Value Chains for Rural Development” program, funded by USAID, they 

support small-scale farmers, including women and ethnic minorities, by offering technical 

training, assistance, and grants to stimulate private sector investment in value chains, 

including coffee. They partnered with CQI for training and support throughout the coffee 

value chain in Myanmar. 

While Myanmar’s Government is generally short of funds to support local farmers, 

there is an exception: the Coffee Research, Information, Extension & Training Centre 

(CRIETC). Established in 2003, this centre, under the Ministry of Agriculture and Irrigation, 

employs 16 full-time staff and focuses on various aspects of coffee cultivation, including 

selecting suitable coffee varieties, ensuring high-quality coffee, conserving coffee varieties, 

increasing production yields, problem-solving for expanding growing areas, and providing 

training programs for coffee production and processing (Schmid, 2015). They also conduct 

research into post-harvest technologies, green bean grading, and pest and disease control to 

keep Myanmar’s coffee inventories healthy and productive. 

Myanmar is a burgeoning coffee-producing nation, with the capacity to contribute 

high-quality beans to a global market that has a shortage of arabica and a rising demand for 

top-tier robusta varieties. While the annual coffee production output is currently modest, the 

Government is committed to significantly enlarging coffee cultivation areas in the coming 

years. According to Winrock International, the Value Chain for Rural Development (VCRD) 

project, funded by USAID, seeks to incorporate smallholders and impoverished rural 

households into competitive commercial value chains. Spanning a duration of five years from 

2014 to 2019 of this project, the primary objective is to enhance the entire process of coffee 

cultivation, processing, and marketing. Therefore, coffee production has been increasing 

since 2015 and the production increased from 8300 tonnes in 2015 to about 8900 tonnes in 

2021 (see Figure 2.6).  

 



 

 16 

 
Figure 2.6: The Volume of Coffee Production (Green) in Myanmar, 2012-2021 

Source: Representation by using data from FAOSTAT 

 

Myanmar is still not widely recognized on the global stage as a notable origin for 

high-quality coffee beans. It tends to be overshadowed by neighbouring countries such as 

China, Vietnam, Thailand, and Indonesia (Schmid, 2015). Currently, most of the coffee 

produced is shipped to neighbouring countries such as China, Malaysia and Thailand  through 

cross-border trade (see Figure 2.7). Although Myanmar could export to other markets outside 

of Asia, the volume is still low. Coffee production is distributed through three primary 

avenues: 1) domestic consumption, 2) exports to nearby nations referred to as “Border 

Trade”, and 3) exports facilitated through the principal Yangon port, commonly termed as 

“International exports” (Winston et.al, 2005).  

 

7400

7600

7800

8000

8200

8400

8600

8800

9000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Production Quantities of Coffee, 
Green in Myanmar (tonnes)



 

 17 

 
Figure 2.7: Destinations of Myanmar Coffee Exports (2022) 

Source: Representation by using data from Department of Trade (Myanmar) 

 

In 2021, the export of green coffee saw a notable increase, reaching 1365 tons, 

marking a positive upturn following two years of decline (see Figure 2.8). Since that period, 

coffee exports experienced substantial growth with 3721 tonnes in 2022 due to the 

collaborative effort of the Government, UNODC, Winrock International and coffee 

cooperatives.   

 

 
Figure 2.8: The Volume of Coffee Exports, 2013-2022 

Source: Representation by using data from ITC Trade Map 

0%
10%
20%
30%
40%
50%
60%

China

Malaysia

Thaila
nd

Singapore

Germ
any

South Korea

Saudi A
rabia

Taiw
an…

Belgium
Unite

d…

Others

Destinations of Myanmar's Coffee 
Export-tonnes(%)

0

500

1000

1500

2000

2500

3000

3500

4000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Myanamar's coffee exports (tonnes) 



 

 18 

2.5 Specialty Coffee Production in Myanmar  
 

In 2014, with funding from USAID, Winrock International and the Coffee Quality 

Institute (CQI) collaborated on the VCRD project to assess the potential of assisting 

smallholder coffee farmers in Myanmar to transition to specialty coffee production. Myanmar 

holds a competitive edge over other specialty coffee-producing nations due to its ideal 

harvest conditions, characterized by dry and sunny weather, which are perfect for drying 

coffee. Following the initial pilot project involving four communities in Ywangan, which 

positioned Shan State as a source of some of the world’s most diverse and unique specialty 

coffees. The unique terroir results in “clean, sparkling” natural coffees that stand out globally. 

Additionally, the distinct flavor profiles of coffees from different communities attract micro-

lot curators looking for unique taste experiences. There has been a consistent increase in the 

number of farmers and communities participating in specialty coffee production (USAID, 

2019). Under the right conditions, producing high-value “specialty coffee” provides a 

practical option for enhancing the incomes of smallholder farmers. 

2.5.1 What is specialty coffee? 

 

The Specialty Coffee Association (SCA) played a pivotal role in setting global 

standards for specialty coffee, introducing a new benchmark for coffee quality through a 

trusted scoring system known as “Q grading”, (USAID, 2019). The term “Specialty coffee” 

denotes coffee that has received a grading of 80 points or higher on a 100-point scale (See 

Figure 2.9). This grading is conducted by either a certified coffee taster (SCAA) or a licensed 

Q Grader (CQI) as a result of sensory analysis called “cupping” (see Figure 2.11) (USAID, 

2019). Specialty coffees represent the pinnacle of coffee quality and stand apart from other 

types of coffee. What distinguishes them is that specialty coffee is cultivated at optimal 

altitudes, during the ideal season, in the finest soil conditions, and is harvested at precisely 

the right moment.  

 



 

 19 

 
Figure 2.9: The coffee quality pyramid 

Source: USAID (2019) 

 

Quality is akin to a pyramid (see Figure: 2.9); as quality increases, availability 

decreases, driving its value. Roughly 20% of global coffee production meets the criteria for 

specialty coffee, with only 1-2% of the coffee exhibiting exceptional quality and distinct 

flavour notes (see Figure 2.10) (USAID, 2019). 

 

 
Figure 2.10: Flavour wheel of specialty coffee 

Source: USAID, 2019 

 

 



 

 20 

 
Figure 2.11: Cupping Score of specialty coffee 

Source: USAID, 2019 

 

Specialty coffee is any coffee whose price is determined based on its quality. In the 

specialty coffee market, the price is determined by the flavour characteristics of the cup, 

unlike commercial or commodity coffee, where there is no distinction between coffees from 

different origins such as Brazil, Ecuador, or Vietnam (USAID, 2019). The origin of the 

coffee holds no significance to buyers in the commercial or commodity coffee market. Those 

involved in the specialty coffee production are deeply passionate, while consumers appreciate 

its unique flavour profiles and connection to its origin. Their willingness to pay more reflects 

the value they place on the craftsmanship involved. Roasters and baristas play a crucial role 

in educating consumers about origins, flavour profiles, and brewing techniques. Additionally, 

specialty coffee satisfies people’s desire for ritual, storytelling, and unique experiences.  

The journey of creating specialty coffee can be likened to a relay race, with each 

participant playing a crucial role in ensuring its quality from farm to cup. It all starts with the 

unique growing conditions, such as planting Arabica coffee trees in favourable conditions. 

When the cherries are picked at the peak of ripeness and the terroir imparts desirable flavour 

notes, the farmer produces superior cherries. Proper sorting and processing by the processor 

result in high-quality green beans. The roaster then crafts a roasting profile that complements 

the unique flavour notes of the beans. Finally, the skilled barista brews the coffee to 

perfection, allowing the customer to enjoy an exceptional cup. Furthermore, sharing the story 



 

 21 

of its origin and the farmers who cultivated it enhances the customer’s overall experience, 

adding depth and meaning to their enjoyment of the coffee. Specialty coffee is often sourced 

from single origins, allowing consumers to experience the unique characteristics of a 

particular region or farm. Each step in this relay is essential, and any misstep can impact the 

final product’s quality and the customer’s satisfaction (USAID, 2019). 

Production of specialty coffee requires extra care and good practices at every step of 

coffee production: plantation, harvesting, processing, storage and roasting. The techniques 

and practices applied to produce specialty coffee are selectively picking only fully ripe, red 

cherries, removal of lower-quality floating cherries, scattering cherries atop drying tables to 

ensure coffee dries uniformly, sorting out unripe cherries on drying tables, removing moldy 

cherries, turning cherries hourly atop the tables, continuously checking moisture content 

before storage, maintaining 12-13% or lower moisture content during storage, careful 

packing in clean bags during loading/ transport, hulling of cherries in dry mill equipment and 

final hand-sorting of defective beans (USAID, 2019). Ready-to-roast coffee green beans are 

achieved by following these practices.  

 

2.6 Cooperatives in Myanmar 
 

The cooperative movement in Myanmar began under British colonial rule in the early 

20th century. After gaining independence in 1948, the promotion of cooperatives persisted. 

However, from 1962 to 1988, during the period of a centrally planned economy, cooperatives 

developed a negative reputation due to centralized control and inefficiencies. With 

democratic reforms introduced after 1988, the perception of cooperatives has improved 

significantly (ICA, 2020). Currently, cooperatives are actively contributing to the agricultural 

sector and advancing financial inclusion in the country. 

2.6.1 Cooperatives between 1905 and 1947 

 

Cooperatives were introduced in Myanmar with the enactment of the Indian 

Cooperative Societies Act in 1904, during its period as part of British India. The first 

cooperative, the Myanmar Agricultural Credit Cooperative Society in Myinmu Township of 



 

 22 

the Sagaing region, was established in 1905. Credit cooperatives were also established in this 

region to combat exploitation by informal money lenders. By 1929, credit cooperatives had 

gained popularity in the rural agrarian environment of British India, and Myanmar boasted 

4,000 credit cooperatives. The Great Depression of the 1930s had a significant impact on the 

prosperity of credit cooperatives, leading to a drastic reduction in their numbers from 4,000 in 

1930 to 57 in 1935.  

2.6.2 Cooperatives between 1948 and 1988 

 

Following independence in 1948, the newly formed Government promoted 

cooperatives as the primary vehicle for advancing the socialist economy and departing from 

the reforms introduced during British administration (ICA, 2020). During the initial post-

independence years, cooperatives were primarily state-controlled and active in the 

agricultural and financial sectors. However, in 1962, a military-socialist regime, led by Army 

Chief General Ne Win, overthrew the post-independence Government. During this period, 

cooperatives remained under state control, dominant in agriculture and finance, and were 

used to promote socialism. In 1975, the military-socialist regime established the Central 

Cooperative Society (CCS) to regulate and promote cooperatives. Under the socialist regime, 

Myanmar's economy faced a downturn, and state-controlled cooperatives failed to stimulate 

economic growth. Cooperatives became synonymous with the government and were 

characterized by forced participation, inadequate supervision and management, minimal 

emphasis on member education and training, and a lack of attention to cooperative values and 

principles (ICA, 2020). In the 1980s, as Myanmar grappled with economic challenges, Army 

Chief General Ne Win abandoned socialist policies and embraced a framework for a 

capitalist economy in the pursuit of nation-building. This marked the first phase of the post-

socialist era in Myanmar (1988-2011).  

2.6.3 Cooperatives between 1989 and 2011 

 

With the opening of the economy, the focus on cooperatives waned as they were 

largely controlled by the state. However, new cooperative legislation passed in 1992 paved 



 

 23 

the way for the incorporation of cooperative principles into law, the establishment of a four-

tier cooperative structure, and the autonomy and independence of cooperatives from the 

government (ICA, 2020). To promote rural cooperatives, collaborations with international 

non-governmental organizations were forged, aiming to support local farm-based 

organizations. For instance, AVSI, an Italian-supported organization, directed its efforts 

toward the promotion of rural cooperatives in 2003. In 2008, it provided technical assistance 

to cooperatives in the Delta Region, which had been affected by Cyclone Nargis. Such 

initiatives contributed to improving the image of local cooperatives.  

2.6.4 Cooperatives from 2012 to the present 

 

In 2012, CCS underwent restructuring, enabling it to function as an autonomous and 

independent national apex federation responsible for business and the promotion of 

cooperatives. It also began working toward educating and training cooperative members. 

Post-2012, Myanmar placed a stronger emphasis on promoting higher education and training 

in cooperatives. Two former cooperative colleges in Thanlyin and Sagaing were transformed 

into universities offering post-graduate diploma and master’s programs to educate young 

people about cooperatives and develop human resources for cooperatives (ICA, 2020). 

In 2014, CCS and the Ministry of Agriculture, Livestock, and Irrigation (MOALI) 

formed collaborations with international organizations to promote cooperative development 

in the country. The second phase of the post-socialist era in Myanmar commenced in 2016, 

bringing a boost to industrialization, manufacturing, and tourism. However, the agricultural 

sector continues to dominate the economy. In 2019, agriculture, livestock, and forestry 

constituted 81% of all cooperatives in Myanmar. Agricultural, savings and thrift, and 

microfinance cooperatives are actively promoted to address poverty, encourage sustainable 

agriculture, and enhance financial inclusion (ICA, 2020). Currently, in Myanmar, there are a 

total of 39,929 cooperatives, with approximately 4.22 million members, which constitutes 

about 7.9% of the population. These cooperatives also provide employment to approximately 

132,551 individuals (ICA, 2020). 

 



 

 24 

 
Table 2.2: Number of cooperatives in different sectors of Myanmar 
 

Sectors  Number of cooperatives  

Production 

Agriculture  27655 

Livestock 4576 

Industrial 512 

Forestry 13 

Services 

Microfinance 3648 

Transportation 116 

Construction 57 

Social  33 

Others 179 

Trade 

Trading 2572 

General business 93 

Government employee cooperatives 440 

Store 34 

Levels of operation 

Township cooperative federations** - 

Regional and state union cooperative 

federations** 

- 

CCS 1 

Total 39929 

 

Source: ICA (2020) 

*Others include women, healthcare, and multipurpose cooperatives. 

**Township cooperative federations, and regional and state union cooperative federations are 

engaged in production, trade, and service sectors. 

 

Cooperatives play a significant role in Myanmar’s production and service sectors. 

Over the past two decades (from 2000 to 2020), there has been a notable rise in collaborative 



 

 25 

efforts between MOALI, CCS, and international organizations. These efforts aim to support 

micro-finance cooperatives, savings, and credit cooperatives, increase women’s involvement 

in cooperatives, improve rural livelihoods, enhance cooperative members’ education and 

capacity, secure cost-effective agricultural resources, and facilitate the export of agricultural 

products (ICA, 2020).   

 

2.7 Laws on Cooperatives  
Before independence, Myanmar was subject to three cooperative laws: the Indian 

Cooperative Act of 1904, the Government of India Act of 1919, and Burma Act VI, which 

was the Cooperative Society Act of 1927. While the 1904 law permitted the establishment of 

cooperatives in Myanmar, the 1927 law allowed for the dissolution of credit cooperatives 

during the Great Depression. Following its independence in 1948, Myanmar enacted three 

cooperative laws: the Cooperative Societies Act of 1956, the Cooperative Societies Act of 

1970, and the Cooperative Society Law of 1992. The 1970 law received Government 

endorsement and allowed for the formation of cooperatives based on territorial 

considerations. The 1992 law granted cooperatives autonomy in the post-socialist era and 

remains in effect in Myanmar. In 1998, the initial Cooperative Society Rules were 

established, and in 2013, these rules were revised for a second time to oversee and regulate 

cooperatives (ICA, 2020). 

A primary cooperative requires a minimum of five individuals with shared business 

objectives to complete its registration. Associate members can be admitted to a primary 

cooperative as long as they are aged 12 years or above. As stipulated by the Union of 

Myanmar Income Tax Law (Amended in 2011), cooperatives are obligated to pay taxes, 

similar to individuals and other organizations. Nonetheless, as outlined in the Cooperative 

Society Rules of 2013, expenses related to duties and taxes, the restoration of capital assets 

due to wear and tear, allowances for bad debts, and the general provident fund for staff 

members are considered part of the cooperative’s expenditures. Any remaining balance in 

favor of the cooperative, after these deductions, constitutes its net profit. The sequence for the 

allocation of net profits is as follows: dividends, service bonuses for the executive committee, 

directors, and staff of the society, refund payments for the purchase or sale of goods, and 

investments (ICA, 2020). 



 

 26 

CHAPTER 3 LITERATURE REVIEW 
 

This chapter provides an overview of the relevant ideas that pertain to the research 

issue. Section One discusses evolution of cooperatives, the definitions of cooperatives, and 

the principles of cooperatives. Section two examines why cooperatives are established while 

Section Three describes why members join cooperatives. Section four discusses the benefits 

that cooperatives bring to their members while Section Five reviews the emerging market 

trends in agri-food sector and global coffee market. Section six discusses the role of farmers’ 

organizations in enabling farmers’ participation in specialty markets.  

3.1. Evolution of cooperatives  
The cooperative business model was first established in Rochdale, England, in the late 

18th and early 19th centuries as a means for individuals with low-income to generate a 

livelihood (Sambuo, 2023). Over the past decades, various types of cooperatives have been 

formed, including consumer, housing, worker, credit, and agricultural cooperatives and 

towards 1970s, a new generation of hybrid cooperatives emerged, driven by social, economic, 

and political shifts. Most of the transformations in modern cooperatives took place in the 

early 19th century, when they shifted from their conventional structure to a more business-

oriented one. This shift was prompted by the challenging economic circumstances brought 

about by the Industrial Revolution, leading people to establish cooperative businesses to 

address their needs (Brian, 1999). Like many other entities, the development of cooperatives 

was not a self-contained development, but rather a manifestation of larger shifts in social and 

economic dynamics over time (Ackers, 2000; Fairbairn, 2004; Wilkinson, 1996). Today, it 

remains a valuable approach for governments and businesses to support their employees in 

achieving greater success in their professional paths (Gray et al., 2014). 

The first cooperative, a consumer cooperative, was established in 1844, providing 

members with essential food and other products. The Rochdale cooperative also developed 

the foundational cooperative principles, which were later adopted as a model for other 

cooperatives (Barton, 1989; Birchall, 1997; ICA, 2007). During the Great Depression, many 

consumer cooperatives emerged as people sought to collectively purchase goods at the lowest 

possible price (Cropp & Ingalsbe, 1989; Fairbairn, 2004; Zeuli et al., 2004). Housing 

cooperatives were first established in Norway and Sweden during the 1890s. In the USA, 



 

 27 

housing cooperatives became popular among higher-income individuals and retirees and were 

particularly active in developed countries before World War I (Birchall, 1997). Credit 

cooperatives, which provided savings and credit to their members, gradually expanded in 

Europe during the post-war period of the 1860s. Agricultural cooperatives, formed in the 

1860s, assisted farmers by organizing inputs for crop and livestock production and 

facilitating marketing and processing (Birchall, 1997; Ingalse & Groves, 1989; McLeod, 

2006; Zeuli & Cropp, 2004). Most cooperatives operated independently until 1895 when 

cooperative representatives, primarily from European countries like Britain, Germany, 

Belgium, Italy, and Russia, convened to form the International Cooperative Alliance (ICA). 

The ICA is an independent, non-governmental organization which unites, represents, and 

serves cooperatives worldwide by upholding three key objectives: providing information, 

defining and defending cooperative principles, and promoting international trade (Birchall, 

1997).  

The evolution of cooperatives has been shaped by a range of factors, encompassing 

political, societal, and economic influences (Birchall, 2013; Cook, 1995; Fulton, 2001; Zeuli, 

2016). Cook (2018) discusses cooperative development as a complex metaphor with distinct 

phases of existence. The life cycles of cooperatives are contingent upon factors such as their 

establishment, operational planning, management, and market dynamics. Furthermore, their 

maturation and adaptation within evolving business landscapes, often influenced by new 

market entrants, can result in life cycle alterations (Novkovic, 2022).  

Starting from the mid-19th century onward, cooperatives have been categorized into 

six fundamental developmental stages, beginning with a metamorphosis phase which holds 

significance for the economic well-being of cooperative members (Sambuo, 2023). At each 

of these stages, individual transactions function the establishment of cooperatives, even 

during the initial phase of development. The transformation of cooperatives commences with 

the initial phase of voluntary membership, primarily centered on economic rationale. This is 

followed by the second phase, which involves the establishment of membership and 

organizational design. The third phase encompasses governance and structural adjustments to 

facilitate sustained growth. The fourth phase revolves around planning and financial 

considerations, emphasizing analysis to enhance visibility and self-reflection. The fifth phase 

marks the initiation of business activities. The final, sixth phase is dedicated to sustainability, 

monitoring, and evaluations. In addition, the ultimate continuity, or dissolution of 

cooperatives during the sixth phase, hinges on a range of decision-making criteria. These 

include choices such as maintaining the current status, generating new ventures, either within 



 

 28 

or outside the cooperative structure, complete withdrawal from operations, or reimagining 

and reinventing their business model to remain pertinent and competitive in a continually 

evolving market (Cook, 2018).  

Additional factors leading to transformation of cooperatives can encompass 

alterations in government regulations or adjustments in costs, such as membership fees, 

which might dissuade members from maintaining their loyalty or result in increased 

dissatisfaction among them (Yacob et al., 2017). In Ethiopia, the evolution of cooperative 

organizations has been shaped by various forms of government and their political ideology 

over a 60-year period, as well as differences in ideologies among the members themselves 

(Tefera et al., 2017).  In Tanzania, the primary reason for the varied life span of cooperatives 

was by government-imposed legislation (Mruma, 2014).  

3.1.1. Definitions of Co-operatives 

 

The fundamental definition of cooperatives, which applies to all cooperative entities, 

relies on three key relationships between a cooperative and its members (Barton, 1989). 

Initially, it is based on the user-ownership principle in which those who possess and fund the 

cooperative are the same individuals who utilize its services. Secondly, the user-governance 

principle is involved in which the cooperative is managed and overseen by those who actively 

use its services. Thirdly, the user-reward principle is applied in which the advantages and 

rewards generated by the cooperative are distributed to its members based on their level of 

usage (Barton, 1989).  

Various definitions have been used in literature to describe a cooperative. Rhodes 

(1983, pg. 1090) defines a cooperative as “a business firm owned and operated for mutual 

benefit by the users, where management is conducted by paid professionals, and the 

members’ interests are represented by an elected board of directors.” Barton (1989, p.3), a 

notable author on cooperatives, describes it as “a legal form of business organization, 

emphasizing that it is a private entity controlled by its members, with the primary aim of 

achieving economic benefits for its members.” A report from the Australian Agricultural 

Council (1988, p.4) defines a cooperative as “an association of primary producers who unite 

to achieve common commercial objectives more effectively than they could individually.” 

Evans & Mead (2010, pg. 1) add that in New Zealand, a cooperative is defined as “an 



 

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organization in which those who transact with (i.e., “patronize”) the organization also own 

and formally control it, deriving significant benefits from those transactions beyond any 

financial returns from their investment in the organization.” 

The United States Department of Agriculture (1994) provides a definition of a 

cooperative as “a business that is owned and controlled by its users, where benefits are 

obtained and distributed fairly based on usage, or as a business owned and controlled by the 

individuals who utilize its services.” Despite the numerous definitions found in various 

literature, the most widely accepted definition among cooperatives comes from the 

International Cooperative Alliance (2012), where the ICA defines a cooperative as “a group 

effort where every member works together to meet the basic needs of the group, devoid of 

any hierarchy structure.” In conclusion, cooperatives stand as unique entities where members 

collectively own, govern, and reap the rewards of their collaborative efforts, embodying a 

democratic and user-centered approach to fulfilling their collective needs.  

3.1.2. The Principles of Co-operatives  

The cooperative principles serve as guidelines for putting cooperative values into 

practice (Kumar et al., 2015). These principles bring forth the idea of cooperation, which 

shapes the framework and basic design of cooperatives. In addition, these principles serve to 

differentiate co-operatives from other types of businesses (Dunn, 1988; Groves; 1985; Hind, 

1994). The Rochdale Society is recognized for popularizing and modernizing cooperative 

principles, which significantly influenced the International Cooperative Alliance (ICA). In 

1995, the ICA adopted principles based on the Rochdale Principles, leading to the 

establishment of seven cooperative principles which have gained international recognition. 

 
First Principle: Voluntary and Open Membership - without discrimination based on 

gender, social, racial, political, or religious factors, available to individuals capable of 

utilizing services and willing to undertake membership responsibilities. 

Second Principle: Member-driven Democratic Control - with active participation in 

policy formulation and decision-making. 

Third Principle: Member Financial Participation - ensuring that members contribute 

proportionally and have democratic control over the cooperative’s capital. 



 

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Fourth Principle: Independence and Autonomy - where cooperatives function as 

independent, self-help entities governed by their members. 

Fifth Principle: Education, Training, and Information - Provision of education and 

training to members, elected representatives, managers, and employees, fostering effective 

contributions to cooperative development. 

Sixth Principle: Collaboration among Cooperatives - Collaboration among cooperatives to 

serve members efficiently and strengthen the cooperative movement, achieved through 

cooperation at local, national, regional, and international levels. 

Seventh Principle: Community Concern - dedication to the sustainable advancement of 

local areas by implementing policies endorsed by their members (ICA, 2007).  

 The principles of cooperatives are primarily based on the values of self-help, 

emphasizing that all members should take responsibility for shaping their own future. 

According to the ICA principles, every cooperative member must be treated equally, meaning 

that an individual’s social and economic status should have no impact on the cooperative’s 

operations. Furthermore, the benefits of the cooperative should be distributed fairly among 

members, reflecting their level of participation in the cooperative’s activities. Solidarity is 

closely tied to the concepts of self-help and mutual help, which are regarded as the 

foundational pillars of the cooperative movement. Lastly, cooperative members are expected 

to uphold values of honesty, openness, social responsibility, and care for others (Birchall, 

1997; ICA, 2007; Prakash, 2003). 

 

3.2. Why are cooperatives formed?  
 

Several elements play a role in motivating farmers to create and set up cooperatives. 

Cooperatives can be established through either top-down or bottom-up approaches. Top-

down formation occurs when policy initiatives encourage or incentivize people to organize 

and join groups. In contrast, bottom-up formation happens when individuals come together 

voluntarily to achieve a shared goal (Olson, 2009). Helm (1968) notes that farmers organize 

and join cooperatives for a range of economic, social, and political reasons. Schrader (1989) 

expands on this by identifying several key motivations for farmers to form cooperatives, 

including the absence of certain services, the advantages of economies of scale, market 

power, acting as a competitive benchmark, and meeting social needs. In addition, the 



 

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formation of cooperatives is driven by the need to address market imbalances between supply 

and demand, which can be alleviated through the utilization of existing resources and 

collaborative efforts (Huybrechts & Mertens, 2014). Cooperatives are also established to 

uphold competitiveness and an effective framework for providing input and marketing 

services to farmers (Cotterill, 1984).   

Agricultural cooperatives are established when the market fails to offer farmers 

essential goods and services at reasonable prices and adequate quality. They rely on various 

financial sources, including member contributions, bank loans, and government subsidies 

(Barmore, 2013; Ortmann & King, 2007). Farmers establish agricultural cooperatives to 

secure economic advantages, increase their influence in the market, and access services and 

facilities that might not be accessible otherwise (Centner, 1988a; Sargent, 1982). Another 

study identified several reasons why farmers form agricultural cooperatives, including their 

lack of market power, the absence of outlet facilities, the opportunity to receive government 

grants, access to improved market services, the ability to reduce price variability, and the 

pooling of resources (Klosler, 1992).  

The presence of market failures is often considered a prevalent factor driving farmers 

towards cooperative formation (Centner, 1988a; Hansmann, 2000). Market failures can take 

various forms, with oligopoly being one of the most well-known. Oligopoly occurs when 

there are few buyers and many sellers, often leading to a lack of price control. To counteract 

the effects of oligopoly, producers may establish a cooperative, enabling them to exert 

collective control over pricing. This, in turn, can lead to farmers benefiting from a more 

equitable distribution of profits (Hansmann, 2000; Porter & Scully, 1987). Cooperatives are 

established to gain and leverage market power for the benefit of their members (Schrader, 

1989). This market power is often focused on market negotiations rather than handling 

financial matters or the production process, which may be managed by another entity. The 

cooperative’s primary role in this context is to act as a unified negotiator on behalf of 

producers, providing countervailing power for numerous small sellers who are up against 

either a monopoly or a few large firms operating as an oligopoly (Worley et al., 2000). 

Cooperatives are also established to enhance competitiveness and efficiency in the 

import and marketing services available to farmers (Cotterill, 1983). When supported, 

cooperatives can influence the overall competitive landscape by prompting profit-driven 

firms to offer comparable services and prices (Harris et al., 1996). Additionally, when 

farmers collectively share their produce, they can achieve greater efficiency and enjoy higher 

net incomes compared to working individually at higher costs. The transaction costs 



 

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associated with providing services in rural areas, such as collecting raw produce and 

transporting it to processing sites, are often high when done independently, but these costs 

can be shared within a cooperative (Stigler, 1958). Another reason for forming a cooperative 

is to offer essential services in import or marketing, particularly when no alternative 

providers exist, such as in the case of absent buyer-providers or service outlets. This is 

especially crucial for part-time and small-scale farmers who face challenges in finding 

markets for their products (Schrader, 1989). The growth of cooperatives, particularly those 

focused on buyer-receiver groups like vegetables, fruits, and nut products in certain countries, 

emerged due to the lack of alternative market outlets. As a result, cooperatives were 

established to serve as the buyer-market outlet for producers looking to sell their goods 

(Centner, 1988b).  

The formation of agricultural cooperatives is closely linked to government policies 

and support. Research in China, for instance, has shown that cooperatives often emerge in 

response to government-initiated changes, leading to rapid development in cooperative 

activities (Zhou, 2004). Similar findings have been observed in various African countries 

(Develtere et al., 2008) as well as in Vanuatu (McGregor, 2009), Fiji (Pathak & Kumar, 

2008) and PNG (Mugambwa, 2005), where cooperatives have also formed as a reaction to 

government policies. Studies conducted in developing countries have identified common 

motivations driving farmers to establish cooperatives, including the pursuit of market 

influence, seeking government support, poverty alleviation, employment generation, and 

improving living standards (Lolojih, 2009; Nganwa et al., 2010; Oktaviani, 2004; Ortmann & 

King, 2007; Pollet, 2009). 

 

3.3. Why members join cooperatives  
 

There are several reasons why individuals choose to join cooperatives. According to 

Barton (1989) and Rhodes (1983), the primary motivation is often economic, although social 

factors also play a role. Four economic reasons that drive farmers to become members of 

cooperatives are the pursuit of economic gains, securing a market for their products, 

enhancing bargaining power, and maintaining or increasing the demand for their commodities 

(Rhodes, 1983). Among these motives, economic returns have been highlighted as the 

primary factor influencing farmers to participate in cooperatives (Foxall & McConnell-



 

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Wood, 1976; Rhodes, 1983). An empirical study conducted in the United Kingdom further 

supports this, revealing that economic incentives are the most critical factors influencing 

members’ decisions to join cooperatives (Foxall & McConnell-Wood, 1976).  

Research has shown that farmers’ decisions to join cooperatives are influenced by 

their beliefs and perceptions about the benefits these organizations offer. For instance, a study 

of North Dakota farmers in the United States revealed that they joined cooperatives because 

they believed that doing so would boost their farm income and productivity, reduce market 

risks, enhance market access, and expand their network and knowledge base (Olsen et al., 

1998). Bhuyan (2000) observed similar motivations in his research on fruit and vegetable 

cooperatives in the United States. Farmers in these cooperatives primarily sought to reduce 

the market risks associated with operating independently and to gain access to value-added 

markets which would otherwise be out of reach. Additionally, Gasson (1977) found that 

farmers joined cooperatives with the expectation that these organizations would help control 

and influence better prices for their produce and secure outlets for their products. They also 

anticipated that cooperatives would offer convenient services, such as centralized packaging 

and grading, which would save them capital. These studies collectively highlight how 

farmers’ perceptions of economic and operational benefits drive their decisions to join 

cooperatives. 

Studies conducted in many developing countries, especially in Africa and the Asia-

Pacific region, commonly highlight several reasons why farmers choose to join cooperatives. 

These include: (1) accessing farming inputs and services at lower costs or where such 

resources are otherwise unavailable; (2) overcoming market challenges that are difficult to 

address individually; (3) creating employment opportunities; and (4) enhancing their standard 

of living (Bernard & Spielman, 2009; Develtere et al., 2008; Pollet, 2009). An empirical 

study conducted on dairy farmers in America explained that the reason for joining was due to 

the economic situation of the members, and also the need to reduce the risks and costs of 

inputs (Misra et al., 1993). In addition, individuals become members of existing cooperatives 

due to psychological and emotional incentives. Bonus (1991) notes that cooperatives serve as 

a means to enhance participation. Conversely, cooperatives serve as a support system, 

enabling their members to exchange valuable knowledge and essential information among 

themselves (Christy, 1987).  

 



 

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3.4. Members’ Benefits of Cooperatives  
Benefits in cooperatives are determined by ownership and the extent of members’ 

utilization of the cooperative’s services (Dunn, 1988), which may include residual claims, 

improved prices, stable markets, training and education, extension services, and more (Alho, 

2015; Grashuis & Su, 2019; Zhang & Kong, 2020; Zhong et al., 2018). Residual claims refer 

to the right to a share of a firm’s net profits (Chaddad & Cook, 2004). In cooperatives, net 

profits are generally distributed as retained surpluses, dividends, and patronage refunds. The 

cooperative can distribute these profits in various ways, such as separating dividends and 

patronage refunds, linking them to capital investment proportional to patronage, distributing 

patronage refunds after paying fixed dividends, or paying dividends after a fixed price 

premium on products (Lin & Huang, 2007; Srinivasan & Phansalkar, 2003). Discounted input 

prices and premiums on output prices are considered alternative forms of patronage refunds 

by the ICA (2015) and Zhang and Wang (2018), practices observed in countries like New 

Zealand (Aini, 2019; Garnevska et al., 2020; Pringle, 1998). Regarding dividends and 

patronage refunds, the ICA (2015) suggests limiting compensation on subscribed capital as a 

membership requirement, a practice seen in some developed countries that cap dividend 

distribution (Zeuli & Radel, 2005). Besides financial benefits, members also value non-

financial advantages, such as an outlet for product sales, market access, stable prices, reliable 

payments, and available processing facilities (Aini, 2019; Kurakin & Visser, 2017).  

Smallholder farmers in developing nations encounter various intricate challenges in 

both production and marketing, impeding the enhancement of their livelihoods. These issues 

include market imperfections, leading to elevated transaction costs for accessing input and 

output markets, inadequate infrastructure, and the geographical dispersion of smallholders. 

Additionally, they face difficulties in obtaining credit services, lack technical proficiency to 

adapt to modern technologies, and struggle to meet changing consumer preferences, such as 

evolving food safety standards. Several studies propose that these obstacles could be 

surmounted if smallholders were organized into collective action groups like cooperatives 

(Bernard et al., 2010; Narrod et al., 2009; Wanyama et al., 2014).  

Cooperative organizations aim to balance market orientation and community 

orientation as they strive to enhance member benefits while keeping costs to a minimum 

(Bolsinger, 2011; Draheim, 1952; Eschenburg, 1971; Henzler, 1962). The expenses 

associated with delivering services in numerous rural regions, such as collecting raw produce 

and transporting it to processing facilities, tend to be quite elevated when carried out 



 

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independently. However, when done through a cooperative, these costs can be distributed 

among members (Stigler, 1958). Agricultural cooperatives, in particular, operate 

autonomously, offering farmers the chance to transport their products to local markets and 

attain their desired prices (Torgerson et.al, 1997). However, it is important to note that the 

extent and nature of these benefits can vary based on individual and context-specific factors 

(Bernard & Spielman, 2009; Bernard et al., 2008; Calkins & Ngo, 2010; Chagwiza et al., 

2016; Mojo et al., 2017; Verhofstadt & Maertens, 2015).  

Many papers have described multiple advantages to members of cooperatives and 

other collective enterprises. Conventional practice has involved evaluating the advantages for 

farmer members by calculating the average absolute benefits received per household annually 

(Verhofstadt & Maertens, 2015). This presents certain challenges, as it cannot measure in 

assessing the services offered by cooperatives and does not capture the complete array of 

benefits that members derive from their cooperative involvement. In this research, rather than 

relying solely on absolute benefits, the distribution of several benefits among members is 

measured.  

The advantages accruing to members of cooperatives and similar collective 

enterprises can be categorized into seven primary areas, as identified in the literature: 1) 

social benefits, 2) marketing benefits, 3) benefits in supplying inputs and services, 4) 

financial benefits, 5) training and education benefits, 6) community benefits, and 7) 

environmental benefits.  

3.4.1. Social Benefits  

The literature highlights human capital development as a social benefit of 

cooperatives, which includes education, training, and support for educational pursuits. As a 

result, society at large has gained valuable skills, knowledge, and experiences (Bacon et al., 

2008; Fairbairn, 1991; Richardson, 2000; Torgerson, 1990). Furthermore, research by others 

(Bauwens & Defourny, 2017; Majee & Hoyt, 2009; Paldam & Svendsen, 2000) indicates that 

cooperatives and collective enterprises have played a role in fostering and sustaining social 

capital, leading to increased levels of trust, cooperation, and civic-minded behavior—a 

significant advantage for society. Social benefits extend beyond the specific community of 

members and have characteristics similar to public goods and services. In particular, 

cooperatives make contributions to society at large by promoting principles of democracy and 



 

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equality, empowering individuals, and holding them accountable for their actions (Fairbairn, 

2006; Hoyt, 2016; Hussein, 2001; Merrett & Walzer, 2001; Nugussie, 2010). Additionally, 

cooperatives play a role in developing leadership skills, and society as a whole has benefited 

from the presence of capable leaders emerging from cooperative experiences (Richardson, 

2000; Torgerson, 1990). In the agricultural sector, cooperatives have significantly improved 

the social welfare of local farmers (Baharuddin, 2012). Similarly, several studies state that 

cooperatives and collective enterprises have also created opportunities for livelihoods and 

employment, providing society with additional income-generating prospects (Ekepu et al., 

2017; Hussein, 2001; King et al., 2013; Nugussie, 2010).  

3.4.2. Marketing Benefits  

Agricultural cooperatives and groups of producers can empower small-scale farmers 

who would otherwise lack influence in the market (Staatz, 1987). Collective enterprises have 

served as markets for members’ products, enabling them to sell their produce to cooperatives 

(Bernard & Spielman, 2009; Shiferaw et al., 2016; Zeuli et al., 2004). Consequently, 

cooperatives are instrumental in helping farmers gain access to specialized markets 

(Blackman et al., 2005). Furthermore, within this group, there are additional dimensions of 

benefits, including services facilitating market entry, such as product and quality 

certifications (Costales et al., 2003; Narrod et al., 2009).  

Collective ownership within cooperatives empowers their members by enhancing 

their negotiating power when dealing with larger and more influential businesses. By 

working collectively, smallholders have the opportunity to achieve economies of scale and 

enhance their bargaining power (Francesconi & Heerink, 2011; Markelova & Mwangi, 2010). 

This elevation of members’ bargaining positions helps protect them from potential 

exploitation (Birchall, 2012; Fulton & Ketilson, 1992; Markelova et al., 2009). Studies, such 

as those by Chagwiza et al. (2016) and Mujawamariya et al. (2013), have demonstrated that 

the critical role of cooperatives in elevating local prices and providing essential protection for 

their members from market exploitation by brokers. 



 

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3.4.3. Benefits in supplying inputs and services 

Members of cooperatives and other collective enterprises have witnessed significant 

benefits in terms of increased access to essential inputs. This includes access to inputs such as 

agrochemicals, fertilizers, technology, and seeds (Abebaw & Haile, 2013; Baviskar, 1988; 

Getnet & Anullo, 2012; Haque et al., 2009; Markelova et al., 2009). Similarly, these 

cooperatives and collective enterprises have made inputs, services, and information more 

affordable for their members. Members have been able to procure these items at prices lower 

than the market rates, whether through cash or credit (Baviskar, 1988; Getnet & Anullo, 

2012; Markelova et al., 2009). Furthermore, members have benefited from increased access 

to a diverse range of services. These include financial services, transportation, healthcare, 

extension services, processing facilities, retail goods, and compliance services like production 

certificates (Barham & Chitemi, 2009; Baviskar, 1988; Bernard & Taffesse, 2012; Bratton, 

1986; Holloway et al., 2000; Morton et al., 1999; Yadoo & Cruickshank, 2010). Additionally, 

members have gained from facilitation and coordination services provided by cooperatives 

and collective enterprises.  

3.4.4. Financial Benefits 

The most commonly observed aspects of benefits in this category encompass financial 

gains related to enhanced prices, income, and profits associated with production (Alho, 2015; 

Barton, 1989; Baviskar, 1988; Bernard et al., 2008; Fulton & Ketilson, 1992; Shumeta & 

D’Haese, 2016; Wollni & Zeller, 2007). Numerous studies demonstrate that joining 

cooperatives posi