Cooperative membership and farmers’ choice of marketing channels – Evidence from apple farmers in Shaanxi and Shandong Provinces, China (original) (raw)
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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.
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The study promotes an analytical framework to monetary the transaction costs for the purpose of assessing the different subfields of transaction cost faced by members in cooperatives and non-cooperatives members, and therefore investigates the role of cooperatives in reducing them using a questionnaire-based survey in Shaanxi province in China. The quantified result of each transaction cost-related item suggests that producers can annually save more than a thousand yuan if they participate in cooperatives. Results also highlight that the medium scale producers would be beneficial most from being a member in cooperatives compared with small-and large-scale ones. By implications, supporting programs referring to improve local road condition, access to internet, and subsidize agricultural cooperatives are highly recommended for policy makers.
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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 (