Assessing factors influencing agricultural cooperative choice of businesses in Oyo State, Nigeria.

Abstract

Agricultural cooperatives play a crucial role in supporting the government's efforts to address national challenges such as unemployment reduction, enhanced well-being, poverty reduction, and rural development. However, certain challenges such as low profitability, accountability and governance issues, and internal pressure have begun to hinder their long-term viability in the dynamic and competitive environment. Therefore, they have diversified into profit yielding businesses to achieve better returns, decrease reliance on one source of income, ensure a more secure future for their societies and enhance their ability to meet the needs of their members. Any cooperatives contemplating to delve into other economic activities should consider some factors before choosing the type of business to engage in for the success of the businesses. Hence, this study examined factors influencing the choice of businesses by agricultural cooperative, and the challenges encountered in running the businesses in Oyo State, Nigeria. The study used primary data, with 12 agricultural cooperatives included through a multi-stage sampling procedure. Descriptive statistics, Multinomial Logistic Regression model (MNL) and Relative Importance Index
were employed to analyse the objectives. The findings demonstrate that 57% choose agricultural-related businesses, 32% choose non-related businesses and 11% interrelated businesses. The results of multinomial logistic regression indicated that the probability of choosing agricultural related, non- related or interrelated businesses was influenced by access to credit services, membership strength, distance from the marketplace, access to extension services, access to training, and the age of the cooperative. A Relative Importance Index of 0.73, 0.67 and 0.66 indicates the major challenges encountered in running their businesses include insufficient storage facilities, erratic power supply,
and insufficient funds respectively. Therefore, the findings of this study should aid stakeholders in designing policies that address the choice of business and tackle challenges encountered by cooperatives operating the profitable businesses. The study recommends that cooperatives evaluate the factors influencing business choices and develop plans that enhance successful business selection beyond core business units