The economic impacts of agricultural cooperatives on smallholder farmers in rural China

Abstract

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.