The role of agricultural cooperatives in serving as a marketing channel: evidence from low-income regions of Sichuan province in China (original) (raw)
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Food Policy, 2018
Cooperatives are established to improve farmers' production conditions, to increase their bargaining power and to enable them to benefit from modern value chains. In China, farmers are members of a cooperative for multiple reasons. Little is known on whether and how cooperative membership affects farmers' choice of marketing channels. This paper examines determinants of farmers' choice of marketing channels, especially how cooperative membership impacts upon this choice. Our analysis is based on survey data collected in 2015 among 625 apple growing farm households in the provinces Shaanxi and Shandong. We employ endogenous switching probit models to deal with potential endogeneity of membership in estimating the determinants of marketing channel choices. We find that cooperative membership has a positive impact on selling to wholesalers and a negative impact on selling to small dealers, but no significant impact on selling to the cooperative itself. As products sold through cooperatives generally comply with relatively stringent food quality and safety standards, these results imply that policies promoting cooperative members to sell their products through cooperatives are likely to have a significant impact on food quality and food safety in China.
The economic impacts of agricultural cooperatives on smallholder farmers in rural China
Agribusiness, 2017
This paper examines the impacts of agricultural cooperative membership on output price, gross income, farm profit, and return on investment (ROI) utilizing a recent household survey data of 481 apple producers in China. We employ a treatment effects model to account for potential selection bias that arises from the fact that cooperative members and nonmembers are systematically different in terms of both observable and unobservable factors. Our analysis reveals that cooperative membership has a positive and statistically significant impact on apple price, gross income, farm profit, and ROI. In addition, we find that the highest profit effect of cooperative membership does not in fact result in the highest ROI effect of the membership, revealing differences in farm income and profitability of investment. [EconLit citations: C35, D71, Q12, Q13]. 1 INTRODUCTION In most developing countries, the smallholder farmers face a systematically unfavorable situation regarding agricultural technology adoption, access to modern supply chain, input use efficiency, and various other uncertainties (World Bank, 2008). These barriers make it difficult for smallholder farmers to benefit from agricultural production and marketing, and tend to widen the income gap between rural and urban residents. Available evidence suggests that average incomes of smallholder farmers in China are just about one-third of their urban counterparts (Grain, 2012). Government programs have thus emerged to enhance smallholder farmers' performance in modern agricultural production. Among others, agricultural cooperatives have been promoted based on their strong potential to improve smallholders' farm performance (
2017
Cooperatives are regarded as an institutional vehicle to help farmers mitigate market imperfections and improve smallholder welfare. Though much research has been done on what effect cooperatives have on farmers’ welfare, the question of how cooperatives affect farmers’ welfare remains largely unanswered. By using the case of apple farmers in China, we seek to answer this question by examining the effect of cooperative membership on yield and profit. The empirical analysis is based on field survey data collected among 551 apple farm households in Shaanxi and Shandong. An endogenous treatment regression model is employed to assess the average treatment effects of cooperative membership on the yield and profits per unit area. Our research shows that cooperative membership has a significantly positive effect on yields, but no significant effect on profits per unit area. Two pathways explain the different effects. First, cooperative services change members’ production practices, especia...
Marketing of farmer professional cooperatives in the wave of transformed agrofood market in China
China Economic Review, 2012
The upstream agrofood market in China is dominated by a vast number of small farmers and traders, which challenges food safety compliance. To promote small farmers' access to the commercialized agrofood market, membership in farmer professional economic cooperatives (FPCs) is considered to be an important strategy by the Chinese leaders. The goals of this study are to investigate the marketing of FPCs in China and to determine their record of food safety compliance. Based on 157 FPCs from a nearly national representative survey, this paper shows that marketing FPCs in China relies primarily on the wholesale market, but there is a notable penetration of the modern supply chain via FPCs. Government-driven agribusiness facilitates farmers' access to markets via FPCs. However, food safety standards are not well-specified in the current FPCs' marketing.
The Effect of Institutional Factors in Marketing of Agricultural Products by Cooperative Farmers
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This study was carried out to examine the effect of institutional factors in marketing of agricultural products by cooperative farmers in Anambra State of Nigeria. Four specific objective The study focused on four specific objectives which were to; examine the socio-economic characteristicsof the cooperative farmers and its effect on market participation; determine the quantum and value of agricultural produce that had been marketed; identify the extent to which agricultural market participation of the framer is influenced by institutional factors such as market information, organizational support, use of grades and standards, and legal environment; and make recommendations based on the findings. Three hypotheses were also tested. Descriptive survey design was used for the study where seven hundred and ten (710) was used as sample size. Findings revealed that market disposition of the member was not related to duration of membership which implied that cooperative experience do not ...
Although Shaanxi province is the largest in China, both in terms of apple production and cultivated areas, with local farmers’ income mainly sourced from apples, the per-capita net income of farmers in Shaanxi province remains behind the national average. Since the market channel choice of farmers could be perceived as one of the available income strategies, this paper provides empirical evidence to measure the impacts of market channel choice on farmers’ income using a Heckman sample selection model and an OLS model based on a farm household survey of 243 apple farmers in Baishui and Luochuan counties of Shaanxi province, China. Moreover, this paper discusses the different impacts of market channel choice on household income among farmers who are cooperative members and those who are not.
2020
Agricultural production cooperatives used to be the “stepchild†of the cooperative movement. Although they stem from a similar long tradition of agricultural service cooperatives, researchers such as Oppenheimer (1896) and Schiller (1969) observed early on that they were not attractive for farmers in villages characterised by family agriculture. In general, it was argued that they were not competitive at all with family farms, but also not corporate farms, thus having no role in agricultural development. Historically, agricultural production cooperatives were formed under specific conditions only. Most prominent were collective farms under the socialist regimes, which were often labelled “agricultural production cooperatives†, although these were by no means of a voluntary nature. However, in recent years, agricultural production cooperatives have been observed in villages characterised by family agriculture. In Chongzhou County (Sichuan Province, China) they cover more than ...
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Recent research has highlighted the importance of agricultural cooperatives on farm production. Although the consensus from the literature suggests that participating in these organizations significantly affects farm production, there is inconclusive evidence on whether this effect is positive or negative. Moreover, previous studies solely focus on the magnitude of this effect and fail to explain the mechanism behind it. This study contributes to this knowledge gap by estimating the impact of agricultural cooperatives on farm profits. To do this, we apply the causal mediation analysis to explain the potential mechanism behind this relationship. Using a nationally representative survey of farm households from Taiwan in 2013, we find that participating in cooperatives increases farm profits. Furthermore, this effect is more pronounced for producers with higher profits. Concerning the mechanism, we find that the use of food labels accounts for approximately 15 to 28% of the total effec...
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In mountainous areas, access to markets and transportation services is particularly important for farmers. Following government initiatives, agricultural cooperatives in China have begun to offer transportation services as part of their service portfolio. This study estimated the impact of cooperatives' transportation services on tobacco farmers' farm income. Using survey data from 337 households in Guizhou Province, China, a two-step control function was used to correct for selection bias. Results showed that access to transportation services increased yearly farm income by up to 4,636 RMB Yuan. The possible reasons for this large increase are discussed and conclusions were drawn for rural development policy. [EconLit citations: Q13, L23] 1 | INTRODUCTION Limited access to markets presents a major obstacle to rural development in developing countries (Gramzow, Batt,
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