Abstract:
The relevance of co-operative unions to the development of primary co-operative societies in
Tanzania is increasingly becoming vague. This is mainly due to the recent phenomenon of some
of these societies declining from selling coffee through their co-operative unions, as was
traditionally he practiced. Incidentally, such societies have been generally assumed to perform
better than before decline. The main objective of this study was to examine the relevance and
key performance indicators of a co-operative union in developing primary co-operative
societies. The Kilimanjaro Native Co-operative Union (KNCU) Ltd. was taken as a case study.
Specific objectives were to identify transaction costs incurred to market per kg of coffee,
identify areas where the 'breakaway' primary co-operative societies were performing better than
the co-operative union, and establish key performance indicators of a co-operative union.
Findings were generated from a survey of 84 randomly selected farmers from six randomly
selected primary co-operative societies. Data were analysed using SPSS. Descriptive statistics
were used to identify transaction costs and the extent to which primary co-operatives were
performing the co-operative unions ' role. A regression using a Logit model identified indicators
of performance. A farmer selling coffee through KNCU incurred higher transaction costs (TShs
937.39/kg) per kg sold than selling through other arrangements (TShs 882.43/kg). Some cooperative societies were now performing (sometimes better) some roles, hitherto, performed by
their unions. In their current operation, co-operative unions have lost their primary objective of
reducing cost, hence, losing their relevance to develop primary co-operatives. Consequently,
KNCU should consider using least cost alternatives (modern) technologies such as money
transfer like "M-pesa" and "Tigo-pesa". Finally, KNCU should provide agricultural inputs,
facilitate education and training of members and search for international market.
