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Measuring the effect of agricultural cooperatives on household income: Case study of a rice‐producing cooperative in China

Hoken, Hisatoshi, Su, Qun
Agribusiness 2018 v.34 no.4 pp. 831-846
case studies, cooperatives, crop production, farmers, household income, rice, China
Agricultural cooperatives in China, known as “Farmers’ Professional Cooperatives” (FPCs), are becoming popular and have been intensely promoted by the Chinese government to improve the economic welfare of small farmers. However, few studies on FPCs have measured the benefits to gain farmers who participate in FPCs after controlling for observable attributes of farmers. This paper investigates the treatment effect of participation in a rice‐producing cooperative in suburban China using the propensity score matching (PSM) method. Estimated results show that a significant difference is observed between participants and nonparticipants of the cooperative in terms of net income from rice production. In addition, there is significant heterogeneity of the treatment effects between large and small farmers. Therefore, we can conclude that the participation in agricultural cooperatives is more beneficial to relatively small farmers who are subject to suffer from higher transaction costs. [EconLit citations: Q12, Q13, O13]