Determinants of Profit Efficiency of Coffee Marketing Cooperatives: the Case of Sidama Coffee Farmers' Union

Coffee is the major export item for Ethiopia?s economy produced and exported to Britain, America and Japan Markets at large by Cooperative Unions. Despite the fact that cooperatives in Ethiopia are marketing coffee at national and international markets, they are also facing fierce competition in international market. Therefore, they have to improve their operational as well as economical efficiency so as to survive and out compete in international markets. The research is conducted with the objective of measuring their level of profit efficiency and to analyze the determinant factors that hinder profit efficiency of cooperatives. The researcher used a mixed paradigm of Quantitative and qualitative Approaches and applies two econometric models. Two Soft wares namely Frontier 4.1 and Stata version 9 were used for the analysis. The research found that both institutional factors such as access to credit, timely distribution of inputs like fertilizer extension service and house hold variables such as education, experience in coffee production and marketing and labor cost were responsible for the low profit efficiency of cooperatives.