Analysis of Business Performance of Agricultural Cooperatives: A case study of Ngolowindo, Nsangu and Chitsanzo Cooperatives in the Central Region of Malawi

The Government of Malawi has been promoting the establishment of farmer organisations including cooperatives in an effort to help small-scale farmers improve their income and develop their managerial skills by venturing into a business oriented approach to farming. However, despite the benefits associated with cooperatives, general cooperative membership is still very low in Malawi and their performance has not been clearly studied. This study examined the performance of producer and marketing agriculture cooperatives as business entities. The study examined the financial performance of agricultural cooperatives using the ratio, DuPont and extra value analyses. The study also assessed elements of organisational and management culture of agriculture cooperatives. The study revealed that the cooperatives studied were performing their business inefficiently. Using the Malawi Reserve Bank base rate of 17.75% as cost of debt, the study revealed that cooperatives diminished the value of members’ investment. The performance of the selected smallholder agriculture cooperatives was also influenced by organisational and management problems. Organisational problems gave rise to low levels of equity and debt capital, reliance on government funding, low levels of investment, and subsequent loss of members. Management problems were strongly linked to low levels of education, lack of production and management skills training and weak marketing arrangements. The study recommends that some well-structured business managementtraining and development programmes be instituted to improve agriculture cooperatives business and management efficiency. Government should formulate a strategy for rebuilding the cooperative movement and monitor its progress until the culture of taking farming as business is fully adopted by farmers.